The forex market in particular and international finance in general is extremely wide. Therefore, each organization participating in the market will have many different purposes such as trading, investing, or speculating. In this article, you will learn with Learn Forex Trading what is a trader and why is the trader profession so attractive. Besides, it is the secret to becoming a successful trader in the forex field.
Job What is a trader? Why do many people choose to be traders?
The trader is an English term that translates to the trader. Their main job is to trade/exchange assets and goods on the market. At the same time, earn profits from the difference in buying and selling prices during trading sessions. Traders can participate in markets such as foreign exchange (forex), stocks, cryptocurrencies,…
Classification groups What is a trader?
Technology is increasingly developing, and assets/goods on the market are more diverse. Along with that, investment goals are also clearly differentiated. Therefore, traders are also classified accordingly.
Classification of Forex traders based on management entity
- Individual traders: Traders of this type usually invest for themselves, with the money in their pocket. They will manage their capital using their abilities.
- Institutional traders: Based on experience, traders will invest using the organization’s budget. They are financial experts who know how to analyze the market and build appropriate strategies.
Forex trader group according to investment strategy
- Swing Traders: A group of people who trade forex within a few committed days. Not too long, not too short. Through technical data, traders will decide whether to hold the position for a few days or endure losses.
- Daily Trader: Daily form What is a trader? These are traders who open and close orders during the day, not holding orders until the next day.
- Short-term trader: A person who trades with small volumes, earning profits through differences in a short period of a few days.
- Long-term trader: A person who trades for a long period such as a week/month/quarter, aiming to earn profits and dividends. This is a group of experienced traders with strong capital.
See more: Forex is a great way to financial “billionaire”
What is a trader’s job on the Forex exchange?
A professional trader regularly does the following tasks:
- Analyze charts using technical tools and analytical skills. From there, you can grasp the price fluctuation trend.
- Update news and financial events that affect short-term price fluctuations.
- Set up short-term and long-term trading strategies, depending on your profit target needs and capital availability.
- Place buy and sell orders with timely and appropriate actions.
Future opportunities for traders on Forex exchanges
By becoming a trader, you will have many opportunities to develop yourself and make money in the future. So specifically, what are the benefits or opportunities for What is a trader?
- Job opportunities: Extremely diverse, focusing on the financial market. You can become a freelance trader, financial consultant, or investment trainer. Depending on each person’s ability and ability to grasp.
- Free work in space and time: You can work anywhere, just need a phone to analyze and place orders.
- Development opportunities: Trading in the field of international finance helps you understand the operating mechanism, and exchange between currency pairs, gold, etc. Later, you can start your own business or do business.
- Big income: Depending on your ability and the amount of capital you spend, you can earn a huge amount of money. Although many people consider trading to be just a side job, it sometimes brings higher profits than the main job. Helps you diversify your income sources and achieve financial freedom.
The challenge of becoming a What is a trader?
Besides great opportunities, traders also face many challenges such as:
- Difficult to control: Forex is an investment channel that is difficult to control because the forex market fluctuates and reverses unexpectedly. Even the trader’s actions are unpredictable, affecting trading psychology.
- Fraudulent forex exchanges: There are no specific sanctions for fraudulent forex exchanges in US. US law still does not protect traders.
- Risk of large losses: Wrong analysis of the market is common, causing quite a lot of losses. Wrong analysis can be due to lack of market understanding, lack of skills and knowledge, etc.
Basic elements needed to become What is a trader?
Anyone can become a forex trader. However, to become a genuine trader, even a successful trader, below are the basic elements you need.
Master basic Forex analysis and capital management skills
The forex market is always volatile and follows a certain trend under specific conditions. Therefore, you need to grasp basic forex analysis skills, thereby identifying factors that affect market prices. Typically: interest rates, GDP, inflation, employment, political factors, news, rumors,…
Besides, capital management is also extremely important. The market always has many delicious pieces for you but there are also many pitfalls. If one trader profits, another trader will lose, which is an inevitable rule. Therefore, capital management will help maintain long-term trading activities. At the same time, capital management will help traders determine acceptable profit/loss levels, keeping their mentality even when they fail.
How to properly read chart parameters and news when trading Forex?
The role of charts and news with What is a trader? Charts help you with technical analysis. News helps you with fundamental analysis. Both forms of analysis are extremely important for traders. You should choose a reputable website to view forex charts and news. For example: Investing.com, fxstreet.com, forexfactory.com,…
Besides, you need to learn about the symbols and numbers on the chart to understand what the chart is reflecting. From there, decide on the appropriate transaction. For example, if you want to trade with the code XAUUSD, you must read and understand the gold price chart.
Risk management skills on the Forex exchange
Do you know the secret to risk management for What is a trader? That is:
- Learn all types of potential risks in the market and methods to minimize each type.
- Set Stop Loss level to minimize losses.
- Don’t risk more than you can afford to lose.
- Consider using leverage in trading strategies.
- Set expected profit levels and stick to them.
Understand and apply indicators and orders when trading Forex
Understanding indicators will help traders analyze and identify market trends. Orders will help traders make transactions on online platforms.
Some popular indicators when trading Forex
So what are the popular forex indicators with What is a trader? Include:
1 – Trend indicator: used to determine the direction of price in the Successful What is forex exchange trading? market. Typical examples are MA, ADX, Ichimoku,…
2 – Momentum indicator: shows change Momentum indicator is a tool that helps traders better understand change, price momentum, and price trends. Typically: MACD, RSI, CCI, Momentum.
3 – Volatility indicator: helps traders determine how volatile a currency pair is. Typically: Bollinger Bands, ATR.
4 – Volume indicator: measures money flow, and buying/selling pressure in the market. Typically: OBV, MFI, A/D.
Types of trading orders you should know in the world What is a trader?
- Buy/Sell Market: Buy/Sell order at the market price, right now.
- Buy Limit: A pending buy order, executed at a price lower than the current price.
- Sell Limit: A pending sell order, executed at a higher price than the current one.
- Buy Stop: A pending order to buy with the expectation that the price will continue to increase past a certain price point.
- Sell Stop: A pending order to sell with the prediction that the price will continue to decrease when it passes a certain point.
Psychological adjustment skills are an important factor for Forex traders
Psychology What is a trader? It is a trader’s reaction to unexpected market fluctuations, to profits and losses. The financial market always has many potential risks and unexpected fluctuations, every minute, every second. Therefore, traders need to know how to control their psychology well, stay calm and see clearly, and avoid falling into market traps, thereby making wrong decisions.
What are the psychological problems that are easily encountered when trading Forex?
- Optimism: This is the psychology when starting to participate in the market. However, being too optimistic will cause you to lose money.
- Pessimism: Occurs when the reality of losses makes you discouraged. Pessimism causes traders to sell off, or to be cautious when they see an uptrend. Sometimes pessimism helps traders avoid haste. However, being unfoundedly pessimistic will cause you to miss out on profit opportunities.
- Fear: This psychology causes traders to sell positions at too low a price, not even daring to buy or sell. Fear overwhelms them, causing them to miss many attractive profit-making opportunities.
- Greed: The greedy psychology of What is a trader? That is overconfidence, leading to buying a lot and swinging to the top. Greed makes them deviate from their original trading strategy. They do not think clearly and forget to manage risks, leading to losses.
- Hope: To hold them back in losses, not daring to cut losses because they think the market will turn around.
- Regret: Negativity, and loss of motivation when losing make you continue to make mistakes. Analyze that failure and focus on finding better opportunities.
How to overcome the psychological barrier of What is a trader?
Trading psychology is simply understood as emotions that influence behavior in trading. Therefore, traders need to know how to overcome it to avoid heavy losses. Here are some tips to help traders stay calm when trading forex:
1 – When you lose continuously, stop trading: This will help the trader calm down. Everyone will fall into a state of constantly placing losing orders. At this time, the best way is to stop trading. Come back to the market when your psychology is normal.
2 – When you win continuously, reduce your trading: It sounds a bit unreasonable, but this will help you reduce excitement, and review trading conditions and order volume.
3 – Limit trading in markets with strong fluctuations: If the market is difficult to determine the trend and has many unfavorable factors, you should not rush in. The market is quite sensitive at this time, so your strategies will not be applicable. Come back when the market cools down.
Distinguishing Forex traders from other concept groups
In trading, many people often confuse the concept of forex trader with other terms such as broker and investor. So what is the difference between a broker, an investor and What is a trader?
- Trader: Also considered an investor but pursues a short-term strategy, profiting from the difference in buying and selling prices. Or to be precise, a trader is a trader who places orders and holds them for a few seconds/hours/days/months.
- Broker: A broker/broker, acting as an intermediary connecting the buyer and seller. They do not transact directly but help buyers and sellers connect. The profit that the broker earns comes from transaction fees/commissions.
- Investor: A long-term investor, buying and holding assets for a certain period. Besides benefiting from price differences, investors can also receive dividends/property rentals or other privileges based on the assets held.
Why should you choose to become a professional trader on the Forex exchange?
If you understand what is a trader, and the opportunities and challenges that the trader profession brings, but are still unsure about the decision to become a professional trader. Here are some of the biggest benefits for you to consider:
- Flexibility: A full-time trader helps you proactively arrange your life as you like. You can decide for yourself where to work, when to work, and how to work. Don’t have to endure traffic jams, pollution, fatigue,…
- Improve knowledge: Trading is not simply a transaction but also a process of learning and cultivating. Besides trading strategies, you can also understand more about economics, politics, market behavior,…
- No retirement: You can trade as long as you like. Because this is not manual work, you can do it right at home, and are not under anyone’s control. You can generate income throughout your life.
- Do other favorite things: Besides money, as a trader, you are free to do what you like, and discover many other interesting things. Such as traveling, learning more skills, drawing, and cooking.
Professional trading experience helps make trading more convenient
The experience of veteran traders with many years of experience always brings valuable knowledge to new traders. Let’s find out the advice they give to What is a trader right below.
“Secrets” for choosing a quality Forex exchange for What is a trader?
With the emergence of countless forex platforms today, traders need to be alert and research carefully. Below are tips for choosing a quality forex broker, helping traders save time and confusion, and avoid falling into scam traps.
Choose a exchange that has been operating for many years
The forex market is extremely competitive and fierce, from traders to the forex exchanges themselves. Therefore, the longer a exchange operates, the better and more reputable its service is. However, that does not mean that newly established exchanges are scams. A quality forex exchange needs to operate continuously for at least 5 years.
Supervised and managed by major financial institutions
Good forex exchanges are those that have passed capacity tests and are licensed to operate by reputable financial institutions. Typically FCA, CFTC, CySEC, NFA,…
Appropriate transaction fees
Trading fees are important to What is a trader? These are spreads, commissions, and overnight fees. In particular, spread and commission are the two main fees traders need to pay to the exchange. Each forex exchange will have different regulations on these fees. You should choose a exchange with fees that match your investment goals. However, be careful with brokers whose fees are too low, because it can be a lure.
Strong trading platform
A strong trading platform needs a clear interface, stable operation, many analytical support tools, an indicator system to support traders, and smooth order matching. Normally, reputable exchanges will support traders with strong platforms such as MT4, and MT5.
Customer service
The need for customer service with What is a trader? The forex trading process often cannot avoid problems or errors. Therefore, quick customer support service will help the forex exchange score points with traders. Shows the broker’s reputation.
See more: Registering Exness broker account on your phone
Where to supplement forex knowledge?
Currently, there are many learning channels for traders who want to improve their forex knowledge, specifically:
- Learn for free with the website: Websites that help you learn forex for free such as traderViet, Babypips, Investing, Tradingview,…
- Learn through YouTube videos: There are many YouTube channels to help you learn forex yourself. However, you should choose to follow a specific channel to avoid information dilution.
- Paid courses: If you are confused about where to learn and from whom, you can carefully research courses from experts on the internet. The courses will help you save time on self-study.
- Learning through books: Benefits of books for What is a trader? The knowledge in the book is the most refined and complete. Some famous books include Forex Market by Ed Ponsi, Currency Trading for Dummies, Trading Psychology 2.0 by Brett N. Steenbarger,…
Search for accurate Forex news sources
Reading and learning about forex news will help analyze market fluctuations as well as serve as a basis for making trading decisions. So the most complete forex news channels for What is a trader?
- Economic calendar: Lists all important news and events such as interest rates, and unemployment rate,… that affect the currency and the economy. Economic calendars are often provided by reputable websites such as Investing.com, fxstreet,…
- Financial news: Famous television stations providing news about forex such as CNBC, Fox News, CNN, Bloomberg,… Articles are published by leading experts in international finance.
- News on the Internet: Typically from websites such as DailyFX, Forex Factory, Investing,…
Practice Forex trading more with demo accounts
A Demo account is just a virtual account, everything happens on it like a real account, except capital and profit/loss. So specifically, what are the benefits of trading on a Demo account for What is a trader?
- Risk-free: Demo accounts are like free forex education. Here, traders can apply the knowledge they have learned, without the pressure of capital risk.
- Get familiar with the trading software: A Demo account will help traders understand the interface, how to place orders, and how to use the platform.
- Learn to control emotions: When participating in forex trading, traders will be influenced by many emotions. Sometimes excited, sometimes disappointed. Trading on a Demo account helps them build habits and practice controlling emotions.
- Strategy testing: Check indicators, and trading strategies, experiment and find out what is the most effective method.
Epilogue
Above, Learn Forex Trading has provided all the information to help you clearly understand What is a trader as well as the opportunities and challenges that the trader profession brings. Besides the experiences that traders have gathered for many years, we hope that new traders can be confident and successful as traders, and even become professional traders in the future.
FAQ
What is a trader?
A trader is someone who participates in the financial markets to buy and sell assets such as stocks, foreign exchange, or commodities, with the hope of profiting from price fluctuations.
Do I need to have special qualifications to become a trader?
There are no specific qualifications required to become a trader. However, having in-depth knowledge of markets and finances is important.
Is it possible to make a lot of money as a trader?
Forex trading can be profitable, but it also comes with risks. There is no guarantee of making a lot of money. Mastering knowledge and managing risks is important.
