Technically, stock brokers can’t be classified as a trader since they only fill in buy or sell orders. These are several categories for traders:
• Stock trader - can either be an individual or firm trading stock in markets as their principal capacity. A stock trader is usually a full-time professional but there are some who work part-time. When he has clients and acts as a money manager with the objective of gaining a profit for the clients’ investment he is also known as a financial advisor. Stock traders either enlist the help of a stock broker or do their trading on their own and may use specialized software and a personal computer in helping them with their investment decisions.
• Day trader - an individual who buys and sells financial instruments, such as stocks, just when all positions are closed and just before the market closes for the day. This is seen as a way to gain some advantage and is seen as somehow bad and so is being limited.
• Pattern day trader - is the description given to a stock trader who makes 4 ‘day trades’ in 5 successive market days, provided the number of day trades exceeds 6 percent of his/her total trades in those 5 days. This type of trading activity is subject to special rules and restrictions because the trader is exposed to intraday risks as well as potential rewards.
• Floor trader - a trader who is also a member of a stock or commodities exchange trading on the floor of that exchange for his/her own account. He must abide by the rules similar to those of brokers who trade in others’ behalf. They are otherwise referred to as ‘locals’
• Rogue trader - is an employee who makes unauthorized trades for his/her employers and is therefore making unapproved financial transactions. This activity is not necessarily illegal but can be dangerous financially for the employers and, depending on the reaction of the concerned individuals, can hold the perpetrator criminally liable.
Many professional stock traders and investors have went thru the formal education process or have had training in the fields of economics, finance, business and administration, commerce, mathematics or computer science, which are going to be of use to this kind of undertaking.
To enter into the world of trading you must consider that it has a high level of risk and uncertainty as well as complexity, especially for the inexperienced thinking that this is an easy means to make big money. Traders face costs such as commissions, fees and taxes. Aside from these are the costs in time and opportunity, cost of personal equipment such as mobile phones, personal computers or laptops which traders use and electricity. All these costs have to be accounted for.
Although there are courses in stock picking and experts report some success in the use of technical or fundamental analysis, economists state that it is not very likely that any amount of analysis can aid stock traders make gains beyond the stack market itself. Academics believe that the most successful stock traders are simply lucky. Stock traders can also make use of stock screens which allow users to input parameters that they desire. Primary benefits with stock screens are the ability to return a small select group of stocks that fit the users’ requirements. Still, some investors’ prefer a mix of environmental, technical, and basic factors to guide them where and when to invest. These stock traders believe that there high level of returns is attributed to their personal insight and accuracy and not just by chance.
If you want to work as a trader, you have to get a bachelor’s degree in economics or finance and build your experience by getting an internship. Write a resume and cover letter and submit them to several companies. Prepare for interview because this will make a difference in getting the job that you are eyeing for. Familiarize yourself with types of trades, stocks, futures or options or bonds.
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