If you are lured by the world of finances and interested in starting your career in the financial sector, the question like what is a trader, what does a trader do, how to be a trader might have crossed your mind. Today, we are here to answer your questions.
What is a Trader?
The word trader or merchant implies buying and selling goods, services, or financial assets on behalf of clients or his/her own account.
They can be either independent and operating on their own account or professionals employed by a financial institution, bank, or hedge fund.
Here is a simple explanation of what a trader does. Simply put, the professional life of a trader consists of buying and selling financial instruments (buying and selling stocks, bonds, currencies, options, proprietary trading, etc.) while monitoring the fluctuations of the stock market prices in real-time, with the goal of generating profits.
On a daily basis, the trader will manage financial operations and decision-making on the markets. But a trading professional also has several other tasks:
- Following the market,
- Carrying out quotes,
- Dealing with customers,
- Managing the interbank market,
- Managing the portfolio,
- Developing new products (especially on derivative markets),
- Buying and selling financial instruments.
Independent individual or company employees can specialize in specific financial markets, assets, or certain stock markets. Therefore, the market maker can specialize in binary trading, commodities, high-frequency trading, Forex, proprietary trading, etc.
What Does a Currency Trader Do?
Now that we have answered the question “what do traders do,” let’s jump to the next point: what does a currency trader do. The Forex market professional invests in the currency market, also called the foreign exchange market. There are different speculating styles one can be prone to, such as long term and short term.
A Forex professional’s job entails a high-frequency trading style, or scalping, which consists of opening a large number of positions that only remain open for a few seconds to a few minutes. It is a type of day trading or intraday trading. To be as fast as possible, Forex market professionals rely on computer programs and trading software.
To become successful in Forex, you need to focus your trading training on the currency market. Besides opening trading positions for clients, the daily Forex routine consists of market watching research, fundamental and technical analysis.
Developing the strategies while reading the indicators and following the market trends makes it a crucial skill to acquire to become a successful Forex market professional.
Forex Trading Lifestyle
It isn’t easy to estimate the salary of a freelance Forex market professional. Nevertheless, to reach a comfortable lifestyle that will allow you to live above the average, you will need to invest a lot of time in learning and practising.
To understand how to trade Forex, one must first ignore the myths about Forex trading. They are numerous and give bad press to this type of trading career.
Many people mistakenly understand that Forex can make you rich quickly, that it is a rigged market or that it is enough to control your nerves to succeed.
Many people dream about the lifestyle, but it requires a lot of effort. But at some point, the reached outcomes become worth the effort. No matter if you manage to start working in an investment bank, hedge fund or you are trading from the comfort of your armchair, if you do it right, full time and with passion, the results will be tremendous.
Forex trading can be exhausting at times. That’s why many merchants work on relaxation and tend to spend quality time when away from computer screens. They try to stick to a healthy lifestyle to stay on top of tasks.
What Does a Commodities Trader Do?
The commodity market is a wholesale and retail market where natural resources are exchanged for processing into finished or semi-finished products.
Buyers (financial institutions, investment companies, individuals) and sellers (producers) trade these commodities, mainly through derivatives: forwards, futures, options, warrants, swaps, etc.
When it comes to commodities market professionals, they are specialized in trading commodity assets. The commodity assets are raw materials aimed at massive consumption and can be divided into agriculture, energy, and precious metals.
Therefore, there are several types of commodity market professionals based on the category of goods they are trading. Fundamental and technical analysis make up part of commodity trading.
As their Forex market peers, what commodity traders typically do is market watching to develop appropriate strategic decisions. Trading commodities mainly require long-term trading strategies, such as trading commodities ETFs.
A commodity market professional with an average of four years of working experience can expect to earn approx. $70,000 per year.