What does a trader do? How is the daily life of a professional trader? Operating financial markets is no longer inaccessible, as in addition to the homebroker, electronic access to the trading platform, the investor now has several tools and sources of information, which were previously extremely expensive or simply inaccessible to the general public.
But after all, is it possible to work from home, making your own schedule and goals, getting some form of constant remuneration? The Bitcoin Market is aware that this path has been increasingly sought after, both for the appeal of quick and easy money, and for the fact that cryptocurrencies allow for 24/7 trading.
For this reason we have developed this article that aims to act as a guide for those who are starting the journey, but at the same time opening the eyes of those who are already in this market, but want to turn the hobby into a profession.
What does a trader do?
Even those who have been following markets for a few years tend to miss this basic principle. Luiz Barsi, the largest individual investor in the Brazilian Stock Exchange, makes very sporadic contributions, which last for decades, looking for dividend-paying companies. For Barsi, there is no “sell high”, graphical analysis or short and medium term trades.
The fact that Luiz Barsi spent months without doing business or never sold his shares does not make him a “less” trader than other people, on the contrary. Barsi has found a style of operation that has proven to work, and is in line with his philosophy.
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Do not be fooled: no one becomes a “better” trader by spending a large number of hours following the market, or performing operations using robots, the automated order shipping systems.
In short, the trader makes investments in one or more asset classes, necessarily traded in public markets. An investor who joins a privately held company, for example, a printing shop or a restaurant, or a citizen who buys apartments to renovate, cannot be considered a trader. A trader needs liquidity.
What types of traders are there?
It would be an extremely complex task to list all the modalities and forms of negotiation. There are traders who exclusively track a handful of assets, or even a single one, while others are able to analyze and trade a hundred.
In addition, there is a whole range of methodologies, from the most fundamentalist trader, who makes profit projections for the company according to different scenarios, while the purely graphic or technical analyst avoids reading newspapers in order not to be influenced.
Again, we make a point of stressing that there is no right and wrong, as well as the option of using tools that assist the analyzes. You will find successful (and unsuccessful) traders in several modalities.
However, it is possible to classify traders according to the practical aspect of performance. It is possible to work in a solo career, as a partner or employee of some institution, or even as an intermediary, an investment advisor duly trained and authorized to carry out orders.
Self-employed, without ties to institutions
This is the most common classification, after all, to be a trader you do not need any authorization, contract or training. Those who think that only beginners or amateurs are in this situation are wrong. Many professionals with decades of experience in the financial market choose their own career at some point.
(+) advantages: flexibility of schedule and goals, freedom to test different methods and markets; it retains all the gain alone; (-) disadvantages: requires a proactive attitude to seek training, tools and investment methodology; lack of predictability of income.
Autonomous, but commissioned or associated
Some traders prefer to work for companies with no employment relationship, but benefit from the structure of a corporation, eventually performing portfolio management. In this case, the trader manages part of the resources of this company, and for this he earns a commission according to his performance. There are models in which there is no shared management, where the trader pays a monthly fee to take advantage of the systems, mentoring and tools.
(+) advantages: exchange of experiences with other traders; possibility of leveraging gains in the case of third party securities management; feedback and learning; (-) disadvantages: the need to adopt short-term strategies, either by charging for shared management, or to bear the costs of the structure.
Institutional
Usually this trader works in the standard CLT model, or exclusive contract through a Legal Entity. It is more common in financial institutions, investment funds, asset managers, and banks, but this figure also exists in traditional companies. There is a clear hierarchical relationship, as this trader provides a service, managing resources of that bank, company, manager or similar.
(+) advantages: income predictability; there is no need to use own resources, however, their remuneration is directly linked to the ability to generate profits for the contractor; (-) disadvantages: gains are entirely due to the contractor, except for eventual models of profit sharing agreements; stricter trading rules, times and norms; variable hierarchy, depending on the contract model.
Broker, or operator
The term broker refers to the trading operator, that employee who was physically inside Bovespa, currently B3, making purchases and sales according to instructions that were transmitted over the phone. Over time, this market has become electronic, however, the figure of this intermediary continues to exist. Even some financial companies do not have a dedicated employee to monitor the execution of orders, and for this reason they choose to delegate this function to some trusted broker or independent agent.
(+) advantages: income predictability; absence of risk in the operation, since the decision to buy and sell is not your responsibility; (-) disadvantages: there is no co-participation in the gains; extremely strict rules, timetables and trading rules; clear hierarchy.
Salestrader the Libero
The salestrader, very similar to the broker, necessarily works on an exclusive contract, usually on the CLT model. However, in addition to carrying out trades according to the client's decision, he is responsible for advising him. Using the company's structure, for example, reports and access to analysts and economists, the salestrader is responsible for presenting products, services and investment suggestions. It acts as a libero, flexibly, both in the trade area, the broker's dedicated function, and in the commercial part.
(+) advantages: income predictability; commissioning, even if indirect, of your sales effort; flexibility between functions; (-) disadvantages: risk of overload, especially in periods when the institution is actively participating in the sale of a product or service; stricter rules, timetables and trading rules; clear hierarchy.
Qualifications needed to become a trader
There is no diploma or training that gives you a trader certification. However, to operate in regulated markets, especially when it comes to financial institutions, there are some legal requirements.
The main one, and most common in Brazil, is the CPA-20, or Professional Certification ANBIMA - Brazilian Association of Entities in the Financial and Capital Markets. This is not a training course for traders, but an examination for the qualification of professionals who work in the distribution of investment products. It is possible to take the CPA-20 exam even if you are not an employee of a financial institution, in the “Single Registration” modality.
Anyone wishing to act as an investment advisor, working directly in the variable income area, the stock and derivatives market, may be accredited by ANCORD - National Association of Brokers and Distributors of Securities, Exchange and Commodities. Although more focused on the trader's day-to-day life, the certification exam for an Autonomous Investment Agent (AAI) is also not focused on training. This is an exam to ensure a minimum level of technical and regulatory knowledge.
As mentioned earlier, indicating a course for training traders is a complex task, since there are numerous markets, approaches, methodologies and techniques. Remember that the emotional is something that influences this choice a lot. Again, there is no better or worse, but different modalities that fit better according to the analysis of each one's risk profile .
Becoming a professional trader
First of all, it is necessary to understand that even the most experienced and successful traders make several mistakes. There is no magic or foolproof method behind brilliant minds like George Soros, Carl Icahn and Bill Ackman. Despite their excellent track record, they all suffered huge losses.
In addition to billionaire current accounts, what separates successful traders from others is dedication, the desire to continuously improve through feedback, knowing how to recognize their own defects, and above all, a lot of control. When emotions take over, they make traders run away from their systems and right decisions.
Remember: it is not the number of hours following quotes or news that makes a trader professional. The successful trader has the ability and coolness to devise a game strategy and follow through. Unlike the amateur trader, the trader knows exactly what his comfortable risk level is for each position.
If there is a secret from the most experienced traders, it is about knowing how to stop, close the position when you are losing. The objective is to minimize losses and maximize gains, seeking even greater returns when a strategy is right.
Like any profession that requires creativity and reasoning, the trader works hard, even when he is doing absolutely nothing. Believe me, waiting patiently for an entry or exit point is inexplicably difficult, and few manage to do so.
Main trader challenges
Regardless of your trader profile, executing orders manually and planning medium and long term, even those who opt for high-frequency robot systems, which perform dozens of trades per minute, the main challenge is to manage the risk.
The number one rule of the financial market is the relationship between risk and return. If you are entering into a risk-free operation, with a return well above inflation, be careful. There is probably some kind of variable that is not being analyzed, and it may end up bringing an ungrateful surprise at the end.
Another major challenge that every trader faces is the learning curve. Those who think they will find a method that fits their profile perfectly and will keep it identical for several months or years are wrong. The market is constantly changing, whether due to the greater use of tools and systems, or the simple fact of changing the profile of its participants.
You will question yourself all the time: whether you made the right decision to follow this path, whether you have what it takes to be a successful trader, whether it is possible to live without predictable income, among others. The important thing is not to try to blame your mistakes on others, or on the "market".
Tips to succeed as a trader
In general, where traders make the most mistakes is the lack of planning, both of the cash flow needed to survive in the first months, in this learning curve, and later. Even experienced traders can and will go through more complicated weeks or months, where it will not be possible to extract any income.
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