A trader who is this
A trader is a participant in trading on an exchange who makes a profit from fluctuations in the rates of financial instruments. The trader's profit largely depends on the trading strategy chosen by him. When choosing strategies with minimal risks, a trader can receive 80-200% of the invested funds annually through systemic trading. More risky strategies multiply the profit percentages, but also increase the risk of losses.
Experienced traders in their interviews advise beginners to choose less risky strategies. Following their advice, the profitability of a novice trader usually does not exceed 100% per annum. As experience grows, a trader can expect a higher percentage of income.
As mentioned above, a trader makes money on fluctuations in the rate of a financial instrument. This term means any object of trade, usually currency, cryptocurrency, precious metals, raw materials, stocks, securities, or futures contracts.
The main principle that a trader is guided by in his activities is buying at the lowest price, selling at the highest. The difference between the buy and sell price is the trader's profit.
For example, you assume that the gold price is more likely to go up. Then you, to make money, buy gold by opening a buy position in the stock market. If your forecast has come true and gold has risen in price, then you sell it at a new price and receive income.
If after watching the video the desire to learn how to become a trader has not disappeared, then below you will find step-by-step instructions.
What a trader needs to know
How to predict when it is more profitable to make a purchase and when to sell? The analysis is used to predict changes in value in trading. There are various types of it, but in general, the analysis is divided into two categories – fundamental and technical.
Fundamental analysis of the Forex market is based on tracking news in the world and predicting their impact on the change in the value of currencies, securities, or other instruments. It is based on the acceptance of the fact that any event in the life of society can cause a fall or rise in the value of some financial instruments, without significantly affecting others.
For example, an increase in the unemployment rate in a country is perceived by investors as a weakness of the economy and are beginning to sell the national currency of this country, which leads to its fall in relation to other countries with more stable economies.
A trader monitors news factors and changes in economic indicators taking place in the world and, based on the information received, makes a conclusion about what is profitable to buy or sell, as well as what deals to wait for now. For this purpose, special trader's news calendars are published, indicating the country, indicator, date, and time of the indicators announcement.
For short periods of time, fundamental analysis is less reliable than technical analysis, since it is not always possible to understand exactly how a particular factor will affect rate fluctuations. In addition, there are a lot of such factors and a novice trader is not always able to correctly assess their changes. Therefore, experienced traders often use fundamental indicators to assess the direction of the market – whether it will rise or fall, and the moments of opening deals are determined based on technical analysis data.
Technical analysis is based on studying the history of price fluctuations, which in our time are depicted in the form of charts in special programs, and identifying the patterns of these fluctuations. The analysis of such graphical images is the essence of technical analysis.
When conducting technical analysis, a number of tools are used in the work:
- Historical levels;
- Indicators;
- Chart shapes;
- Japanese candlestick patterns.
The peculiarities of technical analysis include its schematic nature, the need to study various figures and types of candles.
Technical analysis is considered more accurate, but it also does not provide an opportunity to predict 100% how the course will behave, since in this case the trader is guided by historical data and statistics.
Thus, both fundamental and technical analysis have their own characteristics. In most cases, both types of analysis are used simultaneously in trading, because the more methods used, the more accurate the forecast.
If you are seriously wondering how to become a trader and decide to try this interesting and profitable profession, then get ready right away for the fact that training in the analysis is an ongoing process. Every trader learns analysis all his life, thereby increasing his professional skills and, accordingly, the level of profit.
Types of traders
All traders can be divided into several categories depending on:
- what instruments are used in trading,
- the degree of aggressiveness of the strategy used,
- what time periods the trader uses to conclude deals. On the charts, such periods are called timeframes.
