Who is a trader and where does he work?

In financial markets, a trader is someone who buys and sells stocks, bonds, commodities, and currencies.

Who is that?

A trader, in simple words, can work in a financial institution where he carries out trading activities with the company’s money for a salary and a bonus. But he can also trade for himself, using his own funds, but keeping all the profits for himself.

Technical traders concentrate on the charts. They use various indicators and analyze charts looking for signals to buy or sell.

Fundamental — focus on fundamental analysis, study corporate events, anticipating earnings reports, mergers and acquisitions, reorganizations that may affect the share price.

swing traders often hold their positions for more than one day, trying to catch the trend. They use technical analysis to look for stocks with short-term price momentum.

Commission costs are one of the main disadvantages of short-term trading. However, a number of brokerages offer zero commissions along with tight market spreads, making this a less of a problem.

Today, trading is available not only to professionals with financial education, but also to ordinary people who see it as a source of additional income and an intellectual challenge.

Nonetheless financial literacy is still essential for a trader’s success. A number of trading platforms offer demo modes where you can practice your skills before trading with real money.


Financial traders are often criticized and called «vultures» because their success depends on market volatility and occasional failures. While others defend this practice, arguing that it is a fundamental part of the capitalist economy.


Pros and cons of the profession


Traders must be able to quickly analyze large amounts of information and make informed decisions under high levels of pressure. Trading can be very profitable, but it is also high risk. One can work in a financial institution trading bank money or money from bank customers. You can also work with your own clients, advising them on investment opportunities.

This activity offers many ways and opportunities to earn money. The number of available trading instruments is constantly expanding (suffice it to recall the appearance of cryptocurrencies and the hype around them). Moreover, today there is a significant increase in the quantity and quality of infrastructure services, the number of new market players is constantly growing, and not only professionals (for example, investment and hedge funds), but also private investors, which indicates stable prospects for the further development of online trading.

Another important factor accelerating the development of the online trading industry is the continuous improvement of algorithmic trading software.

Summing up this information on online trading, it is safe to say that this activity is currently one of the most popular types of business on the Internet.

If you work for a company (such as a hedge fund or investment bank) as a day trader, hedge fund manager, or quant trader, you are an employee who is paid a basic forex trader salary and often a performance-based commission. Here are some of the benefits of being a salaried trader:

  • you can use the company’s existing tools and strategies that have already proven to be profitable;
  • training and mentoring programs are often built into the structure of the company, which means that you receive more support than you could organize yourself;
  • you do not risk your own money;
  • there is a career opportunity, which means that you can climb the corporate ladder, and there you can manage more valuable clients and their funds.

There are some downsides to being a salaried trader:

  • if you do not achieve the required profit indicators for the company, you will probably have to deal with a lot of rules, restrictions;
  • there may be office politics or difficult clients to deal with;
  • if you do a good job, you can only get a percentage of the profits paid out as a bonus.


If you are an independent forex trader, instead of getting paid, you will invest your money, but you will also pay yourself with profit from your own trades. Benefits of working for yourself:

  • great flexibility — you can work from anywhere with an internet connection and trade at any time when the market is open (this is 24 hours a day, 5 days a week for Forex);
  • no limits on your income — if there is a profitable strategy, there is no limit on the amount that can be earned (provided there is capital available for trading, of course).

However, just like trading for a company, the independent trader has its drawbacks:

  • you risk your own money, which can lead to higher levels of stress;
  • you cannot rely on a base salary that is automatically paid every month;
  • less built-in structure and support than the company, although there are many educational resources available for traders, but you will need to look for them on your own;
  • you need to find or develop your own tools to improve the efficiency of trading.


What is the difference between a broker and an investor?


This profession is similar to the profession of a broker, but traders usually act on their own behalf, while brokers act on behalf of clients, this is the difference.

The main difference between traders and investors is how long they hold their assets. Generally, investors are known for holding their investments for longer periods, while traders prefer to profit from shorter trades.

A traditional investor who does not use leverage can earn a return of 5-10% per year on their investment. On the other hand, a day trader or a swing trader may have a return of 10% per month.

View overview

  • Day. A day trader does his job in one trading day. Such an analyst does not participate in long-term trading.
  • scalper. This person makes many (from tens to hundreds) of transactions daily, trying to make a small profit from each transaction. As a rule, the foreign exchange market is involved.
  • Medium term. This type of trading differs in the period from a day to several weeks, but no more. Such a trader has the best ratio between risks and rewards.
  • Long term. It is easy to guess that a long-term trader holds a position on a trade for a long time and waits for it to reach maximum profit. In the long run, you need to have a big bank to withstand the ups and downs.


Responsibility and authority


A trader’s day includes market analysis and providing detailed market reports to clients or colleagues:

  • he looks for mispriced assets or other opportunities;
  • works to keep people up to date with current events and prospects in the markets, working closely with clients and colleagues, building strong working relationships;
  • makes many transactions, quickly responding to a changing financial schedule;
  • should strive to attract new customers and provide them with new opportunities.

The main responsibility of a trader is the funds entrusted to him by clients. He is obliged to multiply them, and not vice versa.

Requirements

Not everyone can become a successful trader, for this you not only have to study a lot, but it is also important to have certain qualities. A successful employee must be a great analyst, otherwise you won’t be able to make money.


Personal qualities


Trading is a very responsible job that requires a certain set of skills, as well as the ability to quickly learn new data and adapt to an ever-changing environment.

Traders require exceptional analytical skills and the ability to work with large amounts of data. Such a person should be able to communicate with clients and provide detailed advice on market movements and opportunities.

You need to be able to always take responsibility for your actions, to have self-control when quotes go down. Traders must show a keen interest in the job and learn quickly. Such people must be disciplined and motivated. You will have to make instant decisions without emotions, based on qualitative analysis.

Skills

It is not necessary to have a bachelor’s degree in mathematics or economics to become a trader, but the competition for a job at a large financial institution is high. Without a degree from a prestigious university, it will be difficult to find a job in a big company.

In addition, there is always the opportunity to work for yourself, for this there are many platforms on the network. In theory, it is better to have the necessary knowledge in the following areas:

  • economy;
  • maths;
  • finance;
  • Accounting.


It is important to know how to work with charts, to have an idea of ​​the simplest concepts of the financial market. All this can be studied independently from books.


How to become a trader?


Anyone, regardless of age, can learn to trade on their own from scratch. You should start by reading simple books on the theory of stock trading.

There are online courses online that teach the art of trading at home. They are very effective, especially for beginners. You can work on your mistakes with a mentor. Such an education will allow a novice trader to take the first steps.

There are many different types of traders, it’s worth spending some time thinking about what kind of job best suits your skills and interests. Most traders try to work for the company by buying and selling stocks, bonds, assets for investors. Others work for themselves.

Sales agents act as intermediaries between the client and the market, investing their clients’ money. They communicate directly with them, advising on market issues and investment opportunities.

The main difference is that traders in this case invest only at the direction of their clients. Some specialize in a particular product or market.

You can try to get a job in a company if you manage to cope with the competition, or you can simply become an independent day trader, trading with your own or also client money. It is estimated that around 90% of day traders lose money, so you shouldn’t think of trading as a way to make a quick buck. This is a job that requires professional training and extensive knowledge. And you will also need a sufficient amount of equipment and software to create your own trading table. You have to be realistic about the potential profits you want to make, and don’t take it lightly.

If a person is just starting to trade, he will need significant capital to move forward. There are no traders who constantly make a profit, so losses are inevitable, which you need to be able to cope with. The amount of capital you need will depend entirely on the type of trade and how much you want to earn.


It is estimated that a person wishing to work full-time as a day trader would need around $100,000 to get started. Remember that every trade is a risk, and once you start trading, you need to manage those risks.


It takes time to develop at least two different trading strategies that can then be applied. You need to have a well thought out plan. It should include information on how to enter and exit the market, how much capital to invest, the frequency and cost of transactions.

Markets can be volatile. A clear plan is vital, but so is the ability to read situations and adapt quickly to circumstances. If the strategy stops working, the trader must be ready to adapt it to new conditions or abandon it. Having multiple strategies is very helpful.

To start trading, you will need access to the stock market. If you plan to make fewer transactions, choose a separate plan for each transaction with a broker.


Salary


In Russia, a trader earns at home as much as he wants. A lot depends on it:

  • experience;
  • knowledge;
  • software;
  • jar.

Average earnings of 60 thousand rubles in the stock market. Such profitability is considered quite good, but there are specialists who have devoted all their free time to trading and have already made millions on it.

People in the office receive from 30 thousand rubles, but it all depends on the success of the trades that the trader concludes.

For traders working in companies, their salaries can vary significantly depending on the specific position.

If we start with the salary of a US forex trader, according to Indeed, the average salary is $98,652 per year plus $25,000 in commissions. However, the highest they cited was $196,917.

In our country, only a person who works for himself or brings huge profits to the company can dream of such amounts.

There are a number of different positions available in hedge fund trading such as:

  • analyst;
  • strategist;
  • junior traders/portfolio managers;
  • senior traders/portfolio managers.


Most people in the company start out as an analyst (4-8 years), helping junior and senior traders with data, after which they move on to junior trader.

This is a high turnover industry. If a person manages a $50 million portfolio of assets and earns a 10% return, they will earn $600,000.

A senior portfolio manager who manages a $500 million portfolio and earns 10% of the profits would earn about $6 million a year.


Whether you are trading on your own or for a company, performance is all that a professional needs to think about. The good news is that there is an easy way to improve your trading performance and that is learning from the pros.


Workplace


You will need personal space for market trading. If this room is in a house, appropriate software and a high-tech computer are needed to keep an eye on the market and make quick trades. A separate office is very important. This is how a lot of people work today.

You can find a job in the office and earn money there, but you should understand that in this case you will have to face restrictions.

Оставьте комментарий

Ваш адрес email не будет опубликован.