Who is a trader, and what do they do?

A financial trader buys and sells products within financial markets through a broker, and platforms like MT4 have made access to these markets easy. Retail traders usually trade online, but there are still some more traditional brokers who conduct transactions over the phone or in person.

What type of traders are there?

Types of traders can be classified by their activity and the time frame they hold positions for, such as passive or active traders. Active traders can be subdivided into various categories, such as scalpers, day traders, and swing traders, each with their own holding periods and preferred time frames.

What are the benefits of becoming a trader?

The main benefits of trading include potential unlimited profitability, flexibility in trading hours and instruments, complete control over trading strategies and risk management, and the ability to trade from anywhere.

Do you need qualifications to be a trader?

No, there are no required qualifications to become a trader. However, continuous learning about the markets, new trading strategies, and tools is crucial to success.

Is it hard to become a good trader?

Becoming a successful trader requires diligence, discipline, and dedication. Education is also important, and continuous learning can help traders improve their skills.

Home > Market Analysis > Trading Strategies > How to Become a Trader – Ultimate Career Guide

How to Become a Trader – Ultimate Career Guide

Name: ATFX Trading Strategies
Brand: ATFX
Rating: 9.77 (316 reviews)

Key Takeaways:

Traders must understand trading fundamentals, develop effective strategies, and manage risks is essential for success in trading.
Continuous learning, networking, and adapting to market trends are crucial for long-term growth and success as a trader.

What is a trader?

A trader is an individual who buys and sells financial assets in any financial market. Traders can work independently or for financial institutions, using strategic trades to profit from market movements.

Traders should specialise in the market they choose to trade, such as stocks, forex, or commodities. They use various strategies and tools to forecast market movements and time their trades for maximum profit.

Trader activities can range from day trading to swing trading to position trading, depending on their trading style and strategies.

How to become a trader?

Learn the fundamentals of trading
Earn a degree or a certificate
Select the type of trader you want to be
Choose the right market
Select a broker
Develop trading strategies
Trading with a demo account
Transition to live trading account
Implement risk management and psychology control
Maintain trading journal
Engage in Continuous Learning and Networking
Decide on your trading career path

Learn the Fundamentals of Trading

Understanding trading basics is the fundamental key entry level for all traders, whether they are beginners with no experience or professionals. The trading basics of may include the following:

Understanding the supply and demand in financial markets
Economic data, geopolitical events, market analysis
Trading terminology
Biding and asking prices
Trading hours
Financial market

The easiest way to learn the fundamentals of trading is to read a book or blog from a professional trader or broker and watch a trading basic tutorial video.

Earn a Degree or Certification

Getting a degree or certification in finance or economics related to trading education can provide more advanced knowledge about the industry. You do not necessarily need a certificate to be a trader, but a formal education provides a better learning experience.

Comprehensive curriculums cover a wide range of topics, including financial markets, investment analysis, portfolio management, and risk management, providing you with a well-rounded understanding of the industry.
Courses are taught by experienced professionals with real-world expertise in trading and finance, offering valuable insights and guidance.
Programs incorporate hands-on learning experiences, such as trading simulations and case studies, allowing you to apply theoretical concepts in practical settings.
Universities often have extensive networks of alumni and industry contacts, providing you with valuable networking opportunities and potential career connections.

Select the Type of Trader You Want to Be

Understand the types of trader goals, risk tolerances, strategies, and lifestyles that may influence trading style and decision-making. Three common types of traders are as follows

Day trader: Day Trading is best suited for individuals who can dedicate sufficient time to monitoring the markets during trading hours and are comfortable with the high-frequency nature of this approach.

Swing Trader: Swing trading is suitable for traders who want to capitalize on short-term to medium-term market trends while requiring less time to execute.

Position Trader: Position trading is a long-term investment strategy suitable for individuals comfortable with less frequent trading activity and willing to endure market volatility for potentially larger returns.

Choosing the right trading style according to your current conditions is important in finding the strategy that works best.

Choose the Right Market

Choosing the right financial market to trade is a crucial decision that can significantly affect your trading performance. With a wide range of options available, such as stocks, forex, commodities, and others, it’s important to assess each market based on your knowledge, preferences, and goals. Following are the common markets that traders trade.

Stocks: Trading stocks involves buying and selling shares of publicly traded companies. Stock trading may appeal to individuals interested in specific industries or companies and those seeking opportunities for long-term growth or short-term speculation.

Forex: Forex trading involves buying and selling currency pairs in the foreign exchange market. It may be suitable for individuals interested in global economics and currency markets and those seeking opportunities for short-term trading or hedging currency risk.

Commodities: Trading commodities involves buying and selling physical goods such as gold, oil, agricultural products, etc. It may appeal to individuals interested in tangible assets, inflation hedging, and diversification beyond traditional financial markets.

Factors to Consider Market to Trade

Select a market that aligns with your understanding and expertise. Having knowledge of the market’s fundamentals, drivers, and trading dynamics can give you a competitive edge.

It is important to choose a highly liquid market to ensure smooth execution of trades with minimal slippage. Such markets usually have tight bid-ask spreads and lower transaction costs.

It is important to assess market volatility as it can impact both trading opportunities and risk levels. Higher volatility can lead to greater profit potential but also entails higher risk.

Regulated markets offer greater transparency and security through oversight and investor protection measures.

Select a Broker

A reliable broker provides essential tools, resources, and support to help you execute trades effectively and navigate the complexities of trading. Following are some considerations when choosing a broker.

Regulation: Ensure that the broker is regulated by reputable authorities in their jurisdiction.
Security: Prioritize brokers with robust security measures to protect your personal information and funds.
Trading Platforms: Evaluate the broker’s trading platforms to ensure they are user-friendly, reliable, and equipped with essential tools and features.
Financial Asset Availability: Choose a broker that offers access to the markets and assets you’re interested in trading.
Costs and Fees: Consider the broker’s fee structure, including commissions, spreads, and overnight financing rates.
Educational Resources: Look for brokers that offer educational resources, tutorials, and market analysis.
Customer Support: Reliable customer support is essential for resolving issues and addressing concerns promptly.

Develop Trading Strategies

Trading strategies help traders make informed decisions and navigate the complexities of the financial markets. Traders can develop effective strategies by combining fundamental and technical analysis.

Fundamental analysis involves evaluating the intrinsic value of an asset by analysing economic, financial, and qualitative factors.

Economic Indicators
Company Fundamentals
Market Sentiment

Technical analysis involves analysing historical price data and chart patterns to forecast future price movements.

Trading with a Demo Account

A demo account allows traders to practice under simulated real-market conditions without the fear of losing capital for free. Traders practising with a demo account can benefit from the risk-free environment and real-market conditions, refine trading strategies, and familiarise themselves with the trading platform’s features and tools.

Transition to Live Trading Account

With enough practice and consistency in your demo trading results, it is time to transition to live trading with real money.

Start with a small amount of capital and manage portfolio risk to develop a consistent, disciplined trading strategy. Gradually improve by trading live in the real market.

Implement a Risk Management and Psychology Control

Risk management is a fundamental aspect of successful trading, as it helps protect your investments and minimize potential losses. By understanding and applying risk management techniques, you can safeguard your capital and increase your chances of long-term profitability.

Traders must implement risk management to reduce the emotional stress and psychological impact of trading.

Traders should always have a clear risk management technique plan as follows:

Position Sizing
Stop-Loss Orders
Diversification
Risk-Reward Ratio
Risk Limits

Maintain Trading Journal

A professional trader keeps a detailed trading journal to evaluate each trading performance and gain valuable insights into one’s strengths, weaknesses, and areas for improvement.

Track Your performance entry and exit points, position sizes, and the reasoning behind each trade.
Identify patterns & trends
Refine strategies
Emotional regulation

Traders should regularly update trading journals, review each trade’s performance to learn from mistakes, achieve targeted goals, and always stay alert to adapt to the market.

Engage in Continuous Learning and Networking

Engaging in continuous learning and networking allows you to stay updated with market trends, expand your knowledge, and connect with other traders for valuable insights and advice.

Stay Updated with Market Trends

Follow Industry News: Follow reputable news sources, financial publications, and industry websites to stay abreast of the latest developments in the financial markets. Pay attention to economic indicators, geopolitical events, and central bank announcements that may impact market sentiment and trends.
Attend Webinars and Seminars: Participate in webinars, seminars, and workshops conducted by industry experts and seasoned traders. These events offer valuable insights, analysis, and market perspectives that can help you make more informed trading decisions.
Read Trading Books and Magazine

Connect with Other Traders

Join Trading Communities: Participate in online forums, social media groups, and trading communities where traders share ideas, discuss market trends, and offer support and advice. Engaging with a community of like-minded individuals provides opportunities for networking, collaboration, and learning from others’ experiences.
Attend Trading Meetups and Events: Attend local trading meetups, conferences, and networking events to meet other traders in person and exchange ideas and experiences. Networking with fellow traders allows you to build relationships, share insights, and expand your professional network.
Seek Mentorship and Guidance: Find a mentor or trading coach who can provide personalised guidance, feedback, and mentorship based on their experience and expertise. A mentor can offer valuable insights, help you overcome challenges, and accelerate your learning curve in trading.

Decide on Your Trading Career Path

As you progress in your trading journey, it’s important to consider your long-term goals and aspirations to determine your trading path. Whether you choose to continue trading independently or explore opportunities to trade professionally with a firm, your decision should align with your goals, preferences, and trading style. Here’s how to decide on your trading path:

Independent Trading

Flexibility and Autonomy: Independent trading offers flexibility and autonomy. It allows you to trade on your terms and schedule and work from home. You have full control over your trading decisions, strategies, and portfolio management.
Self-Responsibility: Independent trading requires self-discipline, self-motivation, and self-responsibility. You are solely responsible for your success and must continuously strive to improve your skills, knowledge, and performance.
Potential for Higher Returns: Independent trading offers the potential for higher returns, as you retain all profits from your trades without sharing them with a firm. However, it also entails higher risks and uncertainties.

Professional Trading with a Firm

Access to Resources and Support: Trading with a full-time job in a professional firm provides access to resources, technology, and support systems that can enhance your trading capabilities. You benefit from the firm’s infrastructure, research, and risk management tools.
Structured Environment: Professional trading firms offer a structured and collaborative environment where you can learn from experienced traders, access proprietary trading strategies, and receive mentoring and guidance.
Profit-Sharing Opportunities: Some trading firms offer a profit-sharing commission, where traders receive a share of the profits generated by their trading activities. This provides an additional incentive and potential for earning significant returns.

Making the Career Job Decision

Consider factors such as your risk tolerance, capital requirements, career aspirations, and lifestyle preferences when deciding on your trading path. Evaluate the pros and cons of each option and choose the path that aligns with your goals, values, and circumstances. Remember that your trading path may evolve over time, and it’s okay to reassess and adjust your approach as needed to achieve your objectives.

Train to Become a Trader Now! Successful Trader Await You

Sign up for a demo account now and start honing your skills risk-free. Don’t miss out on the opportunity to become a successful trader with live account.

Last Updated: August 28, 2020

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.