The Stereotypes of Forex Traders: Techies or Traders?

Is it true that the majority of forex traders can be considered as techies? This is a common misconception that stems from the high levels of technology involved in trading today. While technology plays a significant role in the forex market, it does not necessarily mean that all forex traders are coded or tech-savvy individuals. To understand this, let's delve into the characteristics of typical forex traders and explore the role of technology in their trading.

Are All Forex Traders Techies?

It is a well-known fact that the forex market is driven by technology. Traders have access to a plethora of trading instruments, whether it be trading in forex instruments, Bitcoin, or engaging in social trading. This accessibility to technology is certainly a benefit, but it is not the only factor that defines a successful trader. Technology is just one aspect of trading, and not every trader is skilled in the intricacies of coding or mechanical strategies.

Trader and coder are two distinct categories. Very rarely do individuals possess both the skill sets. If your goal is to become a forex trader, gaining a deep understanding of forex trading mechanics is essential. Being a PC techie, such knowledge will not enhance your forex trading skills. My expertise lies in understanding chart analysis, not in coding. I have learned to explain to coders what my trading tools should display or what an expert advisor (EA) should do.

Creating an EA or an automated strategy requires clear communication with a coder. You need to define exactly what you are looking to automate, and the coder will translate it into code. Basic programming knowledge, such as the understanding of "if then else" conditions, can still be beneficial today. Over the past 15 years, developing trading tools, I have learned to bridge the gap between my vision and the coder's implementation.

Please be prepared for the fact that many forex traders, especially those at big banks or big funds, do not engage directly with the technology. They use software to facilitate their trades or rely on over-the-counter (OTC) methods via phone lines or chat rooms. The user interface of this software is often not very high-tech, dating back to 10-20 years. This does not mean these traders are lacking; they rely on their ability to identify macro trends, take calculated risks, and manage position risks.

The infrastructure supporting forex trading is constantly renewed and improved for speed and liquidity. However, the traders themselves do not deal with the technology behind the scenes. Their strength lies in their ability to recognize macro trends and make timely decisions based on those trends. Most forex traders at sell-side banks are old-school, focusing on pressing buy and sell buttons rather than managing complex trading systems.

The Role of Automation in Forex Trading

While forex trading can benefit from automation, many automated EA's or automated strategies do not consistently work as intended. The market is situational, and chart patterns might not be replicated perfectly. It is necessary to add filters and control variables to avoid being in the market all the time. Writing these automated strategies can be a daunting task, often requiring thousands of lines of code.

There are a few key points that underscore the importance of clear communication and basic technical knowledge in the world of forex trading. Understanding the intricacies of trading software and automating strategies is a complex process. However, for the majority of traders, success comes from a combination of methodical analysis, market understanding, and risk management.

It is important to recognize that while technology is a fundamental aspect of modern trading, it is not the sole determinant of a trader's success. Skilled trading lies in a balance of technical and fundamental analysis, combined with a deep understanding of market dynamics and sound risk management practices.

Conclusion

The true skill of forex trading lies in understanding the complexities of the market, identifying trends, and making informed decisions. While technology and automation offer powerful tools, they are not a substitute for the knowledge and experience necessary to excel in the forex market.

Keywords: forex traders, technical analysis, trading software, automation, trading strategies