Trader is any investor or speculator who operates in the financial markets in order to obtain benefits in the short, medium or long term.
You can act independently or work for an investment bank, acting, in many cases, as a market maker at the front office or treasury tables.
The trader can operate on any product or investment modality, whether cash or future, fixed income products, equities, commodities, interest rates, organized derivatives, non-organized or OTC derivatives, currencies, investment funds, ETFs. Your exposure to the different asset classes that are part of the financial markets will depend on your availability and experience, since each market has its own characteristics.
Each trader, based on their purchasing power, will define their rules of behavior and carry out a stock market analysis looking for an optimal risk-benefit ratio. In addition, it is important to bear in mind that an investor becomes a trader based on experience, psychology (a very important element) and proper monetary management.
The investor will make their investment decisions taking into account the technical analysis and the fundamental analysis (see types of stock market analysis) or, they will be able to act through automatic investment systems that work by themselves, created through programmed price rules. that they invest in many cases, in very short periods of time. This type of trading is special and is known as HFT (High Frequency Trading). There are different types of trading that you can see here.
Routine of a trader
To be a trader you have to understand that you learn from mistakes, you have to know the market perfectly, be persistent, losses should make you a more analytical and strong investor, since you learn from mistakes. Therefore, at a minimum, you should consider the following before making an investment decision:
- Be informed first thing in the morning of the closings of the markets that are open overnight and predict the opening of the markets that operate during the day.
- Know in detail the economic agenda, news and events of the day. The ideal is to work with an on-live news feed. Try to minimize positions when important news is published.
- Identify investment opportunities
- Detect if there is liquidity in the security, measure the capitalization and the volume of the asset. Measure the level of risk and volatility.
- Define the number of operations to be carried out, the leverage if it is necessary to use it, the risk-profit ratio per operation, discounting all the implicit commissions of the operations.
- Apply mathematical logic.
- Never move stop loss levels against us in case the trade is unsuccessful.
- Look for probabilities of success and failure.
- Measure the maximum expected loss.
- Cut losses ASAP.
- Work through a regulated market member, without a money desk and who launches market orders, since transparency is much greater.
There are many traders looking to speculate in the market, operating as day traders.
Tags: banking right markets