What Is a Trader

What Is a Trader?

5 min read

You might be asking yourself, what is a trader? Well, next to parenting, it could be one of the most significant personal endeavors a person can take on in their lifetime.

I say this because of how difficult and all-consuming it can be at times. And, it is one of the last professions that who you are, and your work ethic is reflected directly back on you in your equity curve. 

stock trader is someone that trades stocks for a living. They can be either a day trader, swing trader, options trader, or long term trader. They make money when they buy and sell stocks or options for a profit. It can be a very lucrative and rewarding career if done right.

Investopedia defines it as an individual who engages in the buying and selling of financial assets in any financial market, either for himself or on behalf of another person or institution.

Basically, when you’re trading, you’re trying to make money by buying and selling stocks. That sounds simple enough right? 

However, it’s not. Stock trading takes determination and willingness to put in work. 

A trader also means you know what trading companies to use and how to trade properly. 

What Is a Trader

Before Taking the Plunge Into Day Trading

The success rate for day traders is estimated to be around only 10%, so …90% are losing money. You don’t want to be in the 90%. That’s why it’s essential to take some time to honestly answer these questions so you can avoid being another statistic:

Will you be patient enough to wait for the right trade set up? More than 50% of the time, the market runs sideways and even a longer time to fuel a trend momentum. And when the momentum comes, it’s short and sweet – if you’re patient enough for it to arrive. In short, trading is boring, and you need the patience to wait – even if it means sitting on your hands.

Are you able to make a trade decision in one or two seconds? The market is dynamic. Unlike swing trading where there is plenty of time to make a decision, there is hardly any time to decide if you want to catch a momentum ride up. In such a situation, can you make trading decisions in seconds? If not, that’s okay as well you have lots of other options such as swing trading. 

Price Execution

Are you willing to wait until a valid buy/sell signal is triggered? No surprise here, but premature entry into a trade will make your trading life miserable.

Not to mention your life in general as your account balance dries up. If your valid entry signal has not yet triggered, there’s a high probability that your trade may go in the opposite direction you want.

Can you place and execute your orders before the price moves away from the entry price? Once a trade entry is triggered, you only have a very short time before the price reaches the target.

To put this in perspective, I’ve seen the target price reached in under 60 seconds. Translation: This requires fast decision and fast action on your part. 

What Is a Stock Trader Salary?

  • Typically a stock trader doesn’t make a salary unless they work for a firm that pays them one. If they do then they can make $100,000+ per year. Stock traders are typically self employed and make their money own their own by buying and selling stocks. Stock traders can make up to $250,000 or more per year, but these results aren’t typical.

Beware of Distractions

Can you focus on your trade without any disturbances, until the trade’s completed? By disturbances I mean Instagram, phone calls, your spouse entering your office, your dog, anything. 

Because once you enter a trade, anything, and I mean anything can happen. What if you entered on a false breakout and the price immediately reverses.

If you’re too busy checking your social media notifications, you’ll miss your exit trigger. The moral of the story is this: Treat day trading as a business and give it your undivided, undisturbed, attentive trading mind until the trade’s completed. 

Magic Bullet of Success

I hate to break it to you, but there’s no magic bullet for success in the trading world. Sorry, but we give it to you straight around here. You’ve got to embrace the learning curve and dare I say, enjoy it.

You can’t escape the hard work it takes to see your equity curve increase. Every incredibly successful trader you see today has been through the tedious, mundane, time-tested process that eventually brings success.

So, don’t look for quick hacks” that bring faster trading results. Instead of trying to find the latest and greatest tip or secret, focus on doing the actual work. You can’t achieve tremendous life success with a quick fix; nobody gets it that easy. 

Types of Traders:

Final Thoughts

Most people, 90%, will fail when they start day trading because they don’t take the time upfront to learn what they need to learn. Whether it is choosing the right market(s), the right trading strategies or proper risk management, without putting some thought into these matters, you’ll be in the 90%.

If you need more help take our stock market basics course.

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