What is a Trader? What types of Trader are there and how do I become a professional Trader?

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2021-03-22 00:17:31

Trader are individuals or organizations specializing in transactions of all kinds of assets such as stocks, gold, electronic money, foreign exchange … to make a profit from speculating price differences in a specified period of time.

What types of traders are there?

To distinguish traders people mainly rely on their trading timeframes. Usually trading many sessions a day, trading in a day or a week … Different trader times will greatly affect the trading technique they have to use to trade. Traders can also be classified according to the main commodity they trade such as stock traders, commodity traders, cryptocurrency traders, etc.The following is how to distinguish traders based on timeframes. they trade.

Scalping Trader (surfing trading)

This type of trader has the shortest trading time, they usually trade multiple orders a day to profit from small continuous fluctuations, so it is often referred to as surfing. This type of trader mainly trades from 15 minutes or less, even line charts or tick chart. Because they enter multiple orders during the day, they are also known as High Frequence Trader.

Scalping Trader 15-minute trading timeframe

In order to be a Scalping Trader you must have strong psychological qualities, sharp reflexes and thorough technical analysis, Scalping Trader also needs to be in good health to be able to monitor the market all day. to detect profitable trade opportunities. Surf trading often clings to a certain trading method rather than using many trading methods due to the need to enter quickly.

Day Trader

Day Traders are people who usually only trade a few times a day and close the order not to leave overnight. Day Trader often relies on combined technical analysis to enter orders with a bit of fundamental analysis to determine the direction of the market in the near future. Trades mainly on 30m ~ 5m frames. Unlike Scalping Trader, Day Trader often uses a variety of trading methods to detect price patterns that can be profitable.

Long Term Trader (Swing Trader)

This is the type of trader with the longest trading time. Long Term Trader will keep his transactions lasting for days, even weeks, months to wait for big fluctuations in order to have high profits.

Long Term Trader usually holds assets for the long term
Long Term Trader usually holds assets for the long term

Unlike the above two types of traders, Long Term Trader mainly depends on fundamental analysis to determine the long-term potential of that asset class. don’t pay attention to short-term volatilityReverse technical analysis is just auxiliary to determine the more reasonable entry point.

Classify traders according to the trading method

Although traders are mainly classified as above, people often classify them according to the trading method they use. There are two main schools of thought: technical analysis and fundamental analysis. However, you absolutely can apply both of these methods to trade without any restrictions.

Fundamental analysis

Traders who use fundamental analysis focus on the intrinsic value of the commodity or stock they buy to gauge profitability without using technical analysis charts. For example, if you judge company A has greater potential than Company B, you will buy stock in Company A, regardless of whether or not the technical analysis is detrimental to the share price of Company A. In addition to intrinsic value, fundamental analysis also depends on news that can cause price volatility, if there is good news, it is a buy signal, otherwise bad news will sell. The advantage of fundamental analysis is that you do not need to be able to analyze good price movements, but only need to evaluate the potential of the commodity you trade. The downside of this method is that it is easy to be led by fake news by others intentionally manipulating the market.

Fundamental traders prefer news and intrinsic value over price chart analysis
Fundamental traders prefer news and intrinsic value over price chart analysis

Technical analysis

Contrary to fundamental analysis traders, technical traders often only believe in price charts, they often assume that price charts reflect the direction of the market and are more reliable than fundamental analysis. . The technical analysis is essentially the analysis of market sentiment combined with statistical probabilities in mathematics to predict the direction of the market. While stock traders often rely on fundamental analysis, forex traders often depend on technical analysis, while cryptocurrency traders often use both methods.

How To Be A Successful Trader?

Although the work of trader today is quite popular, few people understand the nature of trading but only follow the emotions, do not invest a lot of effort. Therefore, the loss rate of the majority of traders is extremely high, some studies show that the loss rate of traders up to 85 ~ 95% proves that this is not an easy job. You need to seriously study and invest efforts in this job to be successful. Here are the qualities that a trader should have.

Steps to becoming a professional trader

Psychological stability

It can be said that strong psychology is the most important factor in trading. The most important difference between a professional trader and a novice is not how highly technical he is, but how firm he is in the market’s volatility. Most traders’ losses are due to their trading lack of discipline and emotional trade.

Ham to learn and understand the market in which you trade

To become a successful trader is a long process that you need to learn a lot about economics and finance, not just buying and selling as most people think. Doing so is like gambling, but gambling means the gambler always wins the losing side. Traders, on the other hand, every trading decision of a trader must be based on the knowledge they have, not just surrendering to chance. Moreover, each different market such as stocks, gold or forex has different characteristics, you need to spend time learning to understand but cannot apply a trading method to many other markets. together.

Learn from experience

Humans are always emotional, we usually only believe what we think is right, but the market is always fair, so we often don’t go in the direction we want. Stubborn thinking that the market must go in the direction you want is the main cause of losses for novice traders. Accepting the wrong way and cutting loss when the market goes in the opposite direction you want is the secret to avoiding losses that everyone knows but few people can do.

Financial management

Financial management is an important skill but is often overlooked in trading because having good financial management, it will not bring any profit for you. This is a misconception, trader is a job with huge risks, not knowing how to manage your finances can make you bankrupt at any time. Remember trader is a job, not a gambling. Always split your money into smaller amounts to invest in different trading opportunities without all hope in a single order and be ready to stop loss at any time. Professional traders recommend that only use 10% of the assets for a single order and lose up to 2% of the assets to be a long-term trader.

Equipment tools: a strong system

A professional trader needs a lot of tools to analyze the market, collect data, analyze information, and log records to be able to enter orders more accurately and improve day by day, not just trading. can be better. You also need a trading methodology system to use. Without a system to rely on, it is also very difficult to progress because there is no specific direction, in addition, relying on the trading system also limits the emotional traders, thereby limiting losses.

summary

Above is a summary of the trader, one of the most exciting and freelance careers in the world of finance. Hope through this article you can have an overview of what a trader is to become a professional trader, good luck.

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