Who is the trader?
Translated from English (from the word trade – to trade, trade), a trader means “a trader”. And although trading has a broad meaning, the word “trader” most often means a trader of exchange commodities.
Traders are engaged in buying and selling securities on the stock exchange – stocks, futures, commodities, currencies, bonds. The trader's place of work is the exchange. But in fact, traders work at home or in their personal office, connecting to the exchange via the Internet.
Trader's place of work
Thanks to the development of online trading on the exchange, the number of traders in the world is growing rapidly. According to broker notes.co, there are more than 3 million traders in Europe, their number doubled over the period 2017-2018. But this does not mean that they all make a profit on the exchange.
If a trader is a beginner, then, according to statistics, he will most likely lose money. But if a trader is a professional, then his operations on the stock exchange more often bring profit than losses. A professional, using his knowledge and experience, analyze the market and, based on the conclusions made, buys undervalued securities at a minimum. And when the paper takes off
The goal of a trader's work is to make a profit. On the one hand, the profession of a trader is based on pure speculation and can be frowned upon. On the other hand, traders benefit from the fact that they fill the financial system with liquidity, stabilize it, satisfy incoming supply and demand, and finance production.
Many people are interested in the questions – how to become a trader? What do I need to do? How to develop? What difficulties will be encountered or will everything happen easily and simply? How long will it take until the first positive results?
Of course, not everyone will have it exactly as described here. The sequence of actions can be different and sometimes shocking! Someone starts from the end, and someone skips the stages, each case is individual, but everyone should have a general idea.
How to become a trader from scratch, where to start?
Stage 1 – Get Started
As the saying goes: if you have an idea, and you haven't started to act within 48 hours, then most likely – you will never start. First, you need to find out:
- initial information about trading, the basics of the basics, so that at least a minimal understanding of the exchange appears; ·
- about brokers and what function they perform;
- about players on the exchange – who buys and who sells;
- on pricing and trading principles; ·
- about trading terminals and terms of trade (commissions, subscription services), etc.
The easiest way is to find out – watch free introductory lessons, for example – 4 lessons for starting on the exchange, which will help you understand all the basics of trading, get a complete understanding of trading on the exchange, and most importantly, you will save a lot of time and get the most necessary knowledge … This path of acquiring knowledge is perhaps one of the shortest, unlike if you studied everything on your own and loaded everything into yourself, which is fraught with an overload of absolutely unnecessary information.
Stage 2 – Application of the acquired knowledge in practice
After you have received the primary knowledge base, learning about quotes, futures contracts, trading terminals, strategies, risks and methods for analyzing charts, etc., it is recommended to open a demo account (with virtual money and without obligations) to see how everything looks from the inside for real and move from theory to practice.
Stage 3 – First deals – first steps
After installing the terminal and connecting the demo account, the fun begins – you have become a novice trader and now you need to learn how to make money by trading! This is the most difficult stage and the most interesting, if it takes several days to overcome the first two, then it can take years to study.
Training is a lengthy process, at least you need to trade for six months – a year in order to visit various exchange situations, feel everything for yourself, see gaps, sharp movements, slippages, carry-overs, and other “surprises” of the exchange. As for making real money, it may take 1-3 years to reach a stable profit, of course, it happens faster, in a few months, it all depends on the thinking and personal qualities of the person.
Trading is a professional activity, not a game and entertainment, as many refer to it.
Trading can make your life meaningful and earn very decent money, it all depends on your approach to business, adequacy, and dedication.
Stage 4 – Replenishment of knowledge
Someone else's experience is certainly very useful, but it is worth remembering that you need to develop your own trading style and understanding of the market. If something is given to one person easily and simply, then it is not a fact that you will have it as well, you will need to find your “grail”, your vision of exchange patterns, but for this, you need to try different trading strategies, market analysis methods and approaches to trade, the only way you will know what exactly is yours.
It is also worth remembering about money management, risk management, and capital management. The ability to manage money is what will determine, first of all, the level of your earnings on the exchange. After all, if your losses exceed your income, then your trading deposit will dry up very quickly. In order to protect yourself from unnecessary losses, we recommend that you familiarize yourself with – six recommendations for traders.
Stage 5 – Practice and more practice
You have a demo account, use it to the maximum, try everything – test strategies, work out situations, analyze charts – candlestick formations, volumes, volatility, market phases. Learn to set a stop-loss, calculate the potential of the price movement, targets, entry, and exit points. Hone the mechanics of actions – clicking on buttons, placing orders, stop orders, working with windows.
Practical experience is the most important thing, it will help you to automatically act in stressful situations. And when you easily begin to navigate in the trading terminal, in the analysis of charts, in the management of transactions, then confidently move on to the next stage.
Stage 6 – Creating your own strategy
You already have a piece of certain baggage of theoretical knowledge, practical experience, and, most importantly, a desire to move forward. At this stage, it's time to discard all unnecessary things and decide on your trading style and create a personal work strategy. As you went through the previous stages, you developed your own vision of market patterns, you began to notice various moments and feel the price movement.