Who is a trader and what does he do? What service is designed for trader statistics? How to choose a trader on the stock exchange and what prices for their services?
Who is a trader and what does he do
Trader makes money from fluctuations in the price of financial instruments. Financial instrument – any «thing», which is sold and bought on the exchange.
Commodity market examples: oil, gas, coal, cotton, corn, wheat, sugar, tea, coffee and t.P. Stock market instruments: stocks and bonds. Derivatives contracts sold on the derivatives market – forwards and futures, on Forex trading – currencies of different states.
About Forex, we already had a lot of articles, read, eg «Currency market». If you are interested in the securities market — I advise you to look into «Stock exchange trading».
To make money on price fluctuations, need to buy cheaper and sell more expensive. But how to find out, low price of a financial instrument or high? She grows or falls? Intuition is useless.
Traders to make trading decisions conduct market analysis. There are a lot of analysis methods, but they all come together in two large branches: technical and fundamental analysis.
Fundamental analysis studies the main thing, what the price change depends on, — individual state economy. As Charles Dow said, the market takes into account everything, so «fundamentalists» peering into the darkest corners of the financial world, different factors.
To predict the change in oil prices, it is necessary to analyze the volume of black gold reserves in consumer countries, primarily in the USA. Pay attention to OPEC decisions – Oil Exporting Organizations, which includes Saudi Arabia, Iran, Iraq and other states.
It will affect political stability/instability in states, where is oil production, the course will be affected by serious natural disasters and other factors.
The example above proves, that conducting a fundamental market analysis is not so easy.
Technical analysis, at first sight, simpler. Forecasting price fluctuations requires look at price history – look at the chart.
If we held historical levels – there is the first group of signals. Connected indicators – there are more signals. And if you still see patterns, candle patterns to distinguish – generally gorgeous.
But here, not everything is smooth. You look at the daily chart of EUR/USD – height, need to trade up, according to the trend.
A weekly open – there is a side. According to the range trading system, it would be time already open for a fall. Moreover, a strong downward trend was previously observed, it is easier for the market to continue its movement, what to turn around.
So think, how to be.
Its difficulties, there are strengths and weaknesses in any analysis method. therefore trading cannot be considered a simple profession. Do not believe advertising type «10 lessons will make you a professional exchange game!» Will not do. Only give some basic knowledge.
On a note
Alexander Elder, book author «How to play and win on the stock exchange» writes: «Tune in to a long exchange road, t.e. count, that you will be a trader almost all your life». Is reasonable.
What are the advantages of an exchange game as a way to make money? Let’s get acquainted with them.
What are the advantages of working as a trader? — 3 positive points
Consider positive aspects of trading – that will give you earnings on speculation, when you achieve high professionalism in it.
To become a trader, will have to devote a lot of time to the market, so do not hope for quick victories and successes.
Moment 1. Independence
No boss, which dictates the working conditions, nothing prevents moving from one city to another or even plying between states. Laptop and internet connection – all you need to earn.
If you are not a very sociable person – trading will be your favorite activity in general, for don’t have to contact anyone, except financial market. And he is taciturn.
Moment 2. Unlimited income
Profit depends on the size of the deposit and the aggressiveness of the trading strategy. More money in the account – the larger amounts you start to risk in each transaction, without increasing the percentage of risk in relation to the total amount.
The more aggressive strategy, the higher the risk, but the more tangible and profitability.
How to understand, you have aggressive trading or not? Conservative approach involves speculation with risk no more than 2% in every transaction. Profitability per month – from 7 to 20%.
If you have a profit less than 50% per month – you trade without the risk of losing a deposit. If a 50% and more – risk losing all your money.
Moment 3. Lack of compulsory education
So many professional traders – self-taught. Their main profession is far from economics. Speculators are especially common to me, received medical education and even worked for many years in the field of healthcare.
A lot of those, who specifically studied.
These are the main advantages of an exchange game. If you add a fly in the ointment and talk about the cons, will come to the fore instability. Profitability even for players with many years of experience is sometimes negative.
Well, another moment…
Once, the modern theologian Alexei Ilyich Osipov was asked: «Currency Exchange Trading – it is a sin?». He replied: «In my opinion (personally in my opinion, The patriarch, may be, will say otherwise), it is a sin. Because this work does not create any material values».
Generally, right, trading – somewhat parasitism.
What are the types of traders — 4 main types
Trading is classified in different ways. If distributed by type of financial instrument, stand out commodity traders, stock, derivatives and foreign exchange markets. If the aggressiveness of the strategy – aggressive and conservative.
Let’s divide by trade duration.
View 1. Day trader
Intraday trading is popular among traders of different market segments. The bottom line is, so that open and close a trading position within 24 hours. Or less: stocks and bods market, for example, not working around the clock.
In the stock market introday trading just especially popular. Cause – leave deals overnight, when bidding is not conducted, risky – prices do not interfere with the move against the trader, broker will not close a deal until morning, the speculator will receive a major loss.
Most of the positions are traded for several hours and then closed. On hourly timeframes, which the trader views during the analysis, little market noise, so forecasts are fairly accurate.
View 2. Scalper
Scalping – also opening and closing a deal during the day, but scalpers work with minute and five minute time frames. This is stress trading, besides difficult: 80-90 minute interest chart conveys market noise, difficult to analyze.
but scalpers earn more than all other traders. The flow of those wishing to master «scalp hunting» the market is growing year by year.
View 3. Mid-term trader
Mid-term traders keep trades open for several days in a row. Charts they analyze on the daily timeframe, and the most profitable points to enter the market are looking for on a four-hour and one-hour time interval.
The older the time frame, the less noise it transmits, the more accurately reflects the situation on the market. Here is a small plate with a ratio of time and noise.
The percentage of noise in relation to the time interval
|2||1 hour||Less than 30%|
|3||4 hours||Less than 10%|
|4||1 day||Less than 3%|
|5||Week 1||No noise, but you need a big deposit to trade|
It’s recommended to begin to develop the market at «medium term». For before going to the same scalping you need to be able to see market trends and have good control over yourself. Self control — integral and extremely important part of trading.
View 4. Long term trader
Long-term traders keep deals open for weeks, sometimes months. They operate not only on technical analysis, but also fundamental data, without which at large time intervals anywhere.
More timeframe, the less time you need to devote to the market. If you keep deals open for weeks, it will be enough to view the charts on the weekend, and on weekdays do not open the terminal at all.
We divided the traders into groups based on the trading period. Now consider the sequence of steps, which will lead you to a successful stock exchange game.
How to become a trader from scratch
The steps are really simple, but don’t think, that everything goes easy and fast. Trading, I repeat, not so simple, as it seems.
And do not think, that as soon as the first transaction is opened, you will give yourself the honorary title of a trader. The fun begins – practice. There will be errors, failures, if you don’t give up – form trading skill.
And then already, after reaching a stable profit, call yourself a professional.
Step 1. We determine the type of trade
Choose a market segment, with which you plan to start trading, then the direction of analysis and the time interval. Weigh the pros and cons of the decision.
In my opinion, From market segments, it is advisable to first take Forex. The foreign exchange market lends itself better to technical analytics, rather than stock, Yes, and prices do not change so dramatically. Train, and then you’ll go to the shares.
Step 2. Choose a broker
When choosing a broker, pay attention to its licensing.
Guarantees, issued by European regulators, almost no value. If you are deceived, you are unlikely to go to the European Union to sue.
Step 3. Go through training
Training is usually available on that broker’s website, which you have chosen to trade. Below we look at three proven brokerage firms, i will mark, where is best for beginners.
Remember, trade training – this is just a start in trading. Don’t think, that you will immediately start earning millions, that patterns will always work, and the candlestick absorption model – expand the market.
Most traders lose money on the exchange. Minority earns. Your task – enter into «the elite». How to do it? Trade. Constantly.
Step 4. We train on a demo account
A demo account is not needed to, to learn to press buttons. You must check your trading strategy through it and go into profit.
Download to terminal quotes history from the very first trading day and mark, where would you enter the market, where would we go. Then analyze the profit/lesion.
Step 5. We open a trading account
The minimum amount to open an account and a deposit to start trading – not the same thing.
There are brokerage firms, the minimum transaction volume for which – 1 lot. If you trade medium-term and follow the rules of money management, will need $20-30 thousand.
Minimum amount for opening an account, naturally, will be less, one hundred or two hundred dollars. Otherwise, not a single newbie trader will go to such a broker.
Step 6. Bidding
When will you go to real trading, record every trading position in the trading journal. Celebrate, where we entered the market and where we left, at what level did Stop Loss and Take Profit orders set, did they move.
For the convenience of analysis, I recommend using the online service «Trader statistics». The video below will tell you about the benefits and principles of the project.
Stages of the movement to success, we now turn to brokerage firms.
How to choose a trader to invest
Almost every major brokerage firm has a PAMM-account service. His principle – choose a successful trader, give him money, then divide the profit from trading.
So that traders do not merge investor capital, they are required to invest their own funds. Ideal ratio of own and invested capital – 50 to 50.
therefore amount of money, owned by a trader – important indicator of reliability. A number of selection recommendations are presented below.
Tip 1. Analyze the rating of traders
If you go to the PAMM accounts page, you will find a great many traders there. Analyze the rating and choose the most suitable option.
Draw your attention, aggressive speculators usually stand on top, they earn a lot, but risk the whole deposit. It is advisable to choose conservative managers.
Tip 2. Give preference to experienced traders
Sometimes amateurs show high profitability for several days. But then they still lose money. To make the right choice, be sure to consider trading time and total profitability.
Tip 3. Learn the trading strategy of the trader
To study strategies and understand the difference of the same scalping from medium-term trading, are necessary basic knowledge of the market. Do not invest real money, not yet trained. Otherwise, you cannot distinguish a good manager from a loser.
On the effectiveness of the application of the strategy says profit chart. Ideal – the most gentle ascending line of profitability.
Tip 4. Check availability of the guarantee capital of the trader
Spoke above. Important is not only the availability of guarantee capital, but also value of its share in relation to the capital of investors.
Normal brokers always provide information about the investments of the trader. If she is not – look for another broker.
Tip 5. Enter into an agreement with several brokers
Nobody canceled diversification. Transferring money to multiple traders will protect your money, if some of them lose their entrusted capital.
But the broker’s bankruptcy, through which traders work, still put your money in great danger. Therefore, you need to distribute investments not only between individual traders, but also between brokerage firms.