The foreign exchange market (typically known as Forex, or FX) contains the largest volume of trading in the world, with an estimated turnover of approximately $5 trillion a day. The brave individuals tasked with monitoring and assisting traders in this vast virtual network of currencies, contracts and stocks are the dealers. FXTM’s senior staff writer, Nikola Grozdanovic, delves into the popular routines and idiosyncrasies of the average dealer to understand just how their mind works.
First things first
It’s common to mistake dealers for traders, but in the world of Forex trading it’s one of the most important distinctions to highlight. Individual traders face the intimidatingly complex financial markets through their computer screens, opening and closing positions as they buy, sell, profit and lose. Dealers are the facilitators of those transactions - they act as the middle men between the trader and the market.
All major financial institutions, including banks and brokers, have a Dealing division. With thousands of transactions occurring every minute, and milliseconds meaning the difference between a profit and a loss, dealers take the principles of precision and accuracy as seriously as devout Christians take the Ten Commandments. And that’s only part of what the dealer does. They must also be in constant communication with liquidity providers (big banks and other large financial institutions). At the same time, dealers must remain alert for any impending market shifts in an effort to maintain the smoothest possible trading environment for their traders.
What’s the big deal?
“The Forex market never sleeps” is a common phrase, even though in reality it operates 24/5 and rests on the weekend. Dealers don’t have that sort of luxury, however. They’re usually up at the crack of dawn during the week; before jumping into that day’s trading activities, they review any price movements and market events they’ve missed. Since the markets are sensitive to all types of factors, ranging from the political to the environmental, dealers must eat news for breakfast 24/7.
Thanks to massive technological strides, a lot of what used to occur on overcrowded trading floors amidst lots of yelling is now automated and processed through software and massive screens. This might not ease the pressure on dealers, but it certainly makes their work more efficient.
A dealer’s remote control may as well only have two buttons: Bloomberg TV and Reuters TV (the power button is practically pointless since dealers’ screens are constantly on). Bloomberg and Reuters are two of the most common sources of financial news for dealers, all of whom must be prepared to react at a moment’s notice to any changes.
When the summer sun sets on the east coast and the New York trading session closes at 5:00pm, there’s a one-hour window before the next trading session in Sydney opens. That’s usually when dealers analyse any trends and opportunities, past or present, which may have an impact on trading strategies. During the winter months, the major trading sessions operate on slightly different hours, so, like an animal, the dealer must seamlessly adapt to constantly changing conditions.
In order to keep their concentration high and their nerves calm, the average dealer will stick to a rigorous daily routine. They process vast amounts of information and monitor transactions worth thousands of dollars on a daily basis, so regular exercise, proper nutrition, meticulous time management and relaxing activities such as meditation and yoga are essential for keeping the dealer’s mental cogs running like clockwork.
Needless to say, the high-pressure job of a dealer is not for everyone - which is what makes their role in the world of Forex that much more significant. Forex traders access the financial markets through brokers like FXTM, and the core of their trading experience is moderated by the Dealing department. FXTM is renowned for its order execution speeds, positive slippage and requote rates; statistics that are checked by auditing giant PricewaterhouseCoopers (PwC) and controlled by the broker’s dealers.
Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.
Risk Warning: There is a high level of risk involved with trading leveraged products such as Forex and CFDs. You should not risk more than you can afford to lose. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.