How to become a trader? The profession of trader is the subject of all fantasies. It is actually different from what movies or novels can sell us. Business Cool makes you discover the salary, but also the trade of trader and that of crypto trader.
Trader comes from the English word “trade” which can be translated as “commerce”. The trader is therefore a natural person who drives a market and trades. There are two possibilities for this professional: to work as an employee or as a self-employed person. If the films present traders as billionaires or bandits in prison, the reality is quite different. This facet represents exceptions and not the general rule.
The trade of a trader consists in buying and selling bonds while constantly following the fluctuation of their price. The trader works on behalf of a bank or a brokerage firm called “Broker” and their clients who have committed large sums. Its primary objective is to make these investments profitable within short periods of time. This activity requires an ultimate level of concentration, a spirit of decision, a taste for risk and an unfailing coolness.
Do you want to work in the banking world? Discover the recruitment process for the biggest players in the sector!
What does the job of trader actually consist of?
The stock market trader buys and sells financial assets (stocks, bonds, currencies, options, etc.). It continuously monitors stock price fluctuations in real time with the aim of generating profits.
The trader, whether self-employed or salaried, may have a specialization in certain assets or in certain stock markets. He can therefore become a binary option trader, high frequency trader, energy trader or even Forex trader. The latter invests in the currency market (foreign exchange market).
The trader’s missions
In his daily life, a trader manages trading operations and decision-making in the markets. He has only one goal: to generate profits for his clients and, at the same time, for himself. In order to achieve this, the professional must complete several missions:
Find out about the state of the market and take into account current developments (exchange rates, new laws, new market players, etc.). To do this, a trader is required to maintain a good network and cultivate useful relationships over the long term.
Buy and sell securities that may increase in value in order to make a profit. Market participants resell securities when they believe the securities have reached their highest price and that their value is unlikely to decline. Generally, the professional follows the instructions of his clients to the letter, he is still required to give his expert opinion.
Advise and support its customers in the purchases and sales to be made. The trader must give informed and useful investment advice.
Make profits and put in place short and long term strategies to achieve maximum profits for his clients and for himself, at the same time. In financial market jargon, this is called: “taking positions”.
More generally, the trader works in the trading room where he makes quotes, deals with clients and manages their portfolio. In his daily life, he is armed with several telephones and microcomputers that send him real-time information on the development of stock market fluctuations and international markets. Thanks to his expertise, he assesses risks, sets product prices and negotiates transactions.
The differences between independent trader and salaried trader
It is important to distinguish between the profession of independent trader and that of salaried trader. The first works for his own account and invests his own savings. The internet has given rise to many independent home traders. Online trading has thus become within reach, thanks in particular to the various free training courses. In recent years, we have also seen the emergence of many crypto-traders or crypto traders, that is to say traders who specialize in topics related to crypto-currencies and more particularly bitcoins.
As for the salaried trader, he is more of a trader on behalf of a client and invests his money. The institutions that employ it are generally banks, investment funds or private companies.
What is crypto trading? Focus on the crypto trading
The cryptocurrency markets are decentralized. Indeed, virtual currencies are not issued by a central authority, but rather pass through a network of computers. They are not regulated. Cryptocurrencies can be bought and sold on exchange platforms and held in dedicated wallets (or wallets). Unlike traditional currencies, cryptocurrencies have digital proof of ownership stored on a blockchain. This means that when a user wishes to sell units of their virtual currency to another user, they must send them to the latter’s virtual wallet.
Crypto trading involves trading the movements of a cryptocurrency through a CFD trading account or buying and selling that currency through an exchange.
A report released by the Cambridge Center for Alternative Finance pointed out that there are more crypto traders than there ever were. They number 35 million users out of the existing 139 million.
To become a crypto trader, you have to go through a cryptocurrency trading platform. When choosing a suitable platform, you will be able to buy cryptocurrencies. You can then trade digital currencies or keep your tokens in your cryptocurrency wallet until you decide to resell them. One of the best and most trusted trading platforms today is eToro.
What training to become a trader?
To become an independent trader, no diploma is required. Many training courses are available online to train for this profession and succeed in generating profits. You can thus become a trader on the internet directly after the baccalaureate. All you need to do is choose a serious stock broker and a reliable trading platform, like MetaTrader 4. However, it is recommended that you practice on a demo account to limit the risks and become familiar with the various tools.
However, to become a salaried financial trader in a bank or investment fund, it is necessary to have a long education. In France, you can take one of the following training courses to apply for the position of trader:
Business or management school diploma (finance specialty)
IEP diploma (finance specialty)
Engineering school diploma, supplemented by training in finance
Professional Masters: banking, finance, management, mathematics, statistics, law, economics
You can also turn to a bac + 6 training:
Specialized master in finance
Specialized master’s degree in market finance
Specialized masters in finance and risk management
Specialized master’s degree in finance, risk, control
The profession of trader is strongly internationally oriented. A mastery of the English language is therefore essential. During your years of training you will have to do internships. We therefore recommend that you turn to positions as an assistant trader. You will thus be able to discover this profession and ensure yourself a good entry point into the world of finance.
Trader’s skills and the qualities required to exercise this profession
To practice the profession of trader, you must have a very good knowledge of the workings of the economy, statistics and IT. A good trader is also able to withstand pressure and keep his cool. He works in the trading rooms which are always in turmoil.
To sum up his skills, a trader must:
- Keep calm to survive in a very noisy environment.
- Follow your intuition and make the right decisions at the right time.
- Be comfortable with the numbers. The trader is required to handle the figures on a daily basis and to draw analyzes from them in record time.
- Have a very good relationship with all market players (salesman, client, back office, etc.).
It is thanks to his network that he will be able to gain insightful information, which will help him in his decision-making.
Keep in mind a certain personal ethic. Clients invest huge sums and risk losing everything if the trader mismanages their money.
Take on the fun side of the activity and keep in mind that sometimes we win and sometimes we lose. The trader can afford to take risks, but he still needs to be in control and be someone responsible so as not to jeopardize the professional lives of others.
The trader’s salary
It is impossible to specify the income generated by independent traders in view of the disparities between them. However, the salary of salaried traders consists of a variable part (bonus) and a fixed part.
What is the average salary of traders in 2021? The average salary of traders in a bank is estimated to be 70,000 euros per year excluding premiums. It mainly depends on the banks and the seniority of the traders. Juniors earn an average of 4,000 to 6,000 euros per month. Bonuses are capped but can reach up to 8 times the base salary.
In the United States, traders’ earnings are much higher, with uncapped premiums reaching millions of dollars per year. Unsurprisingly, therefore, New York City is where most billionaire traders are found.