Trading from home and earning a lucrative salary doing so sounds like the ideal goal for anyone who has a passion for the financial markets. Nevertheless, unless you have a lot of start-up capital to work with, and plenty of talent to go along with it, it’s a bit of a lofty goal at the same time.
Accordingly, trading firms are increasingly upping the ante when it comes to the required skills, educational credentials, and demonstrated track record of achievement necessary to land a position whether it’s a bank, fund, or other type of trading firm.
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Forex trading overview
The foreign exchange, or Forex, market is the means through which countries conduct financial transactions with one another. Those studying international business and finance can learn about Forex trading in a number of ways, including through certificate programs geared towards professionals or via undergraduate or graduate degree programs related to finance. Certificate programs consist of lectures and seminars, whereas training modules might be online PowerPoint presentations.
Concepts learned in these courses can include:
- Gaining experience with first-hand trading
- Learning to trade securely in the Forex marketplace
- Learn and practice skills related to communication and report exposition
- Cost management for trading
- Differences between foreign and domestic trading
Forex Trading Courses
Introduction to International Finance Course
This course introduces students to the global financial market. Lectures address financial concepts, such as options, futures, bonds and money markets, as they pertain to the foreign currency exchange. Students are introduced to trading techniques used specifically by finance professionals who deal with international companies.
Principles of Financial Risk Assessment Course
The international market has a different set of financial risks than the domestic market, such as fluctuations in commodity and stock pricing, and interest and exchange rates. Students learn about techniques for assessing risk, such as examining a company’s financial documents, which is necessary before deciding whether to trade in the Forex market.
International Markets and Economic Concepts Course
Students learn financial management techniques associated specifically with multinational companies. Lectures on international markets and their economic trends build on concepts introduced in international finance and financial risk courses. Topics include foreign investment theories and strategies, political risk management and methods of capital budgeting for a global firm.
Instruction in Forex Trading Course
This course allows students to put into practice the knowledge they have gained about foreign financial markets. Introductory foreign exchange trading courses include the basic history and theories behind international trading. Advanced courses often use a laboratory format to instruct students in trading strategies and techniques. Instruction includes trading simulations that provide students with the opportunity to practice making trades in a global market context.
Best degree for forex trading
A finance degree is hard to attain at some institutions, as there are usually strict GPA requirements. Additionally, not all universities offer one. Finance majors will acquire familiarity with and exposure to many of the topics and concepts related to the various types of tasks they might need to complete at financial institutions.
Students will normally graduate with skills in accounting and financial statement analysis, corporate finance, and a strong understanding of securities and derivatives. Moreover, it has a narrower focus than business or economics.
And because of its general degree of difficulty and high quantitative focus, it’s a highly in-demand degree among banks and financial institutions of all kinds.
Business administration has a broader focus than finance, but these students will still likely come out with at least a basic knowledge of the rudimentary aspects of financial markets and trading.
Business will prepare oneself well for trading, in general, at least when it comes to equities. Many business programs will offer courses in accounting, finance, marketing, and economics – all of which are helpful for those looking to trade financial markets.
Business students are required to understand cash flows, valuation, financial statements, and market competition, and a degree in business will help in these aspects.
The best programs will offer courses in financial accounting, investment analysis, and marketing.
In addition, students will gain practical experience through internships at financial institutions or brokerage firms. This type of program can also be a great foundation for those who wish to pursue a career in finance or investment banking.
Students who graduate with a business degree typically have a well-rounded understanding of how businesses operate and how to make them successful. Some may begin to specialize in certain sectors coming out of college in their first job (e.g., investment banking, consulting). This knowledge can be beneficial when eventually trading securities and other investment products.
Many business majors go on to start their own businesses after graduation or work in various areas of finance such as banking, consulting, and private equity.
When it comes to most financial careers, the common degree preferences include finance, business, and economics (and sometimes accounting when applicable).
Certain forms of trading may be best suited to those with a strong economics background. Those who trade currencies, bonds, and interest rates – because of their macro focus – and even commodities, might favor those with economics training.
The foreign exchange (forex) and bonds markets are often driven by economic data more so than equities (stocks), which are strongly affected by company performance and narratives.
Commodities are driven by supply-and-demand and geopolitical forces, which are also common points of study in an economics curriculum.
A degree in economics can provide the skills needed to analyze financial data and understand how it impacts the markets.
In addition, economics majors learn how to think critically and problem solve, which are essential skills for traders. Many economics programs also offer coursework in financial accounting and investment analysis.
An economics degree provides students with a strong background in micro and macroeconomic theory. This is important for traders because it allows them to understand how global economic factors affect the markets.
Based on their study of microeconomics, students will be able to interpret market data more accurately and make decisions geared toward which securities to buy or sell.
Mathematics and Statistics
Degrees related to math are often prized by traders because they can provide a strong basis for logical and rational thinking, as well as the ability to recognize patterns that lead to profitable trades.
These programs are typically designed to teach students how to apply mathematical tools to solve complex problems in finance. Some also offer coursework in areas like data mining, financial engineering, computational finance, and topics related to risk management.
More and more individuals with strong mathematics and statistics backgrounds are finding careers in the trading industry due to the increasing quantitative- and data-related focus that’s been placed into the financial markets.
Moreover, markets are traded less on discretionary buy and sell factors and more on quant and systematic factors.
As a result, quantitative and data interpretation skills are in high demand. These individuals are also looked at by firms as those who are some of the most teachable and of the highest potential.
Even without a finance or economics background, the mathematically inclined often learn quickly due to their background and aptitude.
For quantitative and algorithmic trading, having very strong mathematical aptitudes is essential, particularly in domains such as probability theory.
With the increasing focus on automated trading, there’s been an increased demand for experts in financial mathematics (especially statistics) over the past decade.
An ideal degree would be one with a strong emphasis on markets trends (such as modern portfolio theory), while some degrees focus on more technical aspects like the ability to perform ad hoc analyses like Monte Carlo simulations and backgrounds in branches of mathematics like stochastic calculus.
Computer science is another strong choice for those aspiring to enter quantitative and algorithmic trading.
The coding experience that comes with it teaches the foundation behind reading and designing modern programs, although these are often developed by those with advanced degrees in the field (and is a lucrative, six-figure profession in itself).
While computer science majors may not go as in-depth in their quantitative studies as mathematics or statistics degree holders, it’s still one of the most mathematically and logically intensive majors offered at most universities.
The best degrees will focus on programming and coding over traditional branches of software development such as networking and databases.
Students should also expect an emphasis on internet-based programming languages such as Java and C++, which are widely used for financial applications and web services.
In addition to providing technical skills relevant to traders, computer science programs tend to be rigorous and fast-paced – which makes them easier than other degrees for students with limited free time (such as those looking to trade full-time). Students may also learn best practices of coding and programming that may be applied to other areas outside of writing trading algorithms.
Engineering or Physics
Again, the emphasis here is on the quantitative skills, analytical thinking, and problem-solving competencies that these professions bring.
Although a physics major may not necessarily know much about finance, the actual math involved is really quite similar and often pursued at a higher level than traditional finance programs.
And with quantitative and algorithmic trading – where those with an engineering or physics background might focus – you’re often ignoring the fundamentals of an asset that are typically analyzed and of interest for those with a finance, business, or economics background. The focus is more on data inputs and discerning the general trends.