What is a trader (Trader)? Types and successful profit-making methods

What is (Trader)

In the modern financial markets, a trader refers to an individual who engages in buying and selling various financial instruments such as stocks, bonds, commodities, currencies, and derivatives with the aim of generating short-term income from trading.

The difference between a trader and an investor is important to understand. Investors typically hold assets for the long term to achieve higher returns, while traders seek to profit from price fluctuations over very short periods, ranging from minutes to a few days.

In trading, there are many different strategies, such as Scalping (@E5@small profits from multiple trades), Day Trading (@E5@trading within a single day), and Swing Trading (@E5@searching for opportunities based on short-term trends).

Historically, being a trader required less convenience and often meant going to the company’s office or directly managing accounts at financial institutions. However, advances in internet technology have made trading much more accessible. Today, traders can understand markets and generate income anywhere, anytime, through secure online trading platforms.

How many types of traders are there?

Classifying traders can be done in various ways, based on the holding period or strategies used:

Day Trader (Day Trading)
A day trader opens and closes positions within the same day, aiming to profit from small price movements during the day. This style involves high risk, especially if leverage (margin) is used excessively.

Scalper (Scalping)
Scalping involves very short-term trading, where traders open multiple positions in a brief period to capture small profits from each trade. It requires deep technical analysis, market knowledge, chart reading skills, and quick recognition of trend changes.

Swing Trader (Swing Trading)
This type exploits short-term market trends and patterns that may last 2-3 days or longer. Swing traders analyze trends and technical patterns to time their entries and exits.

Momentum Trader (Momentum Trading)
These traders profit by following the trend’s direction. For example, during an upward momentum, they buy and wait for prices to rise further; during downward momentum, they sell to profit from falling prices.

Position Trader (Position Trading)
This type holds positions for longer periods (possibly weeks or months), unaffected by short-term market movements. They wait for significant moments before closing their positions.

Technical Analyst (Technical Analysis)
These traders use chart analysis, technical indicators, and past price data to predict future price movements. They require a deep understanding of chart patterns and tools.

Fundamental Analyst (Fundamental Analysis)
This type relies on analyzing fundamental data such as company earnings, economic news, monetary policies, and other information to decide when to enter or exit positions.

What is the profession of a trader?

The main goal of a trader is to generate income by buying at low prices and selling at higher prices. The assets traded are often stocks, bonds, currencies, commodities, or derivatives.

Profit-making in trading depends on several factors, such as:

• Fundamental analysis (fundamental analysis) to understand economic conditions and news
• Technical analysis (technical analysis) to study price movement patterns
• Quantitative analysis (quantitative analysis) to identify trends and opportunities

Some traders do this as a primary profession, while others trade as a side income. Regardless of the approach, the most important aspects are effective risk management and financial planning before starting to trade.

Common misconceptions about being a trader

Getting rich quickly from just a few trades
This misconception often stems from advertising promises that showcase seemingly glamorous results. In reality, successful trading requires patience, market study, learning, strategy development, and trial and error until finding what works best for oneself.

Trading only in the short term
Forex and other markets can be traded in various styles, including both short-term and long-term approaches, depending on individual style and strategy. There’s no need to limit oneself to just one method.

The more you trade, the more profit you make
The number of trades does not determine profit or loss; rather, the quality of each decision does. Successful traders select the best opportunities and avoid trades without solid supporting data.

Everyone can predict the market’s future with certainty
Financial markets are full of uncertainties, and no tool can predict the future with absolute certainty. Even technical indicators analyze past data to make forecasts, but they are not infallible.

Notable global traders

The history of forex trading has produced many legendary entrepreneurs:

George Soros (George Soros)
Famous for making over 1 billion USD by employing deep fundamental analysis and only trading when highly confident, avoiding unnecessary risks.

Andy Krieger (Andy Krieger)
Known for decisive decision-making, knowing when to buy and sell, and managing emotions well even in stressful situations.

Bill Lipschutz (Bill Lipschutz)
Uses trend-following strategies and benefits from price volatility. He spends significant time analyzing data thoroughly to ensure confidence before trading.

Jim Simmons (Jim Simons)
Applies mathematical knowledge and algorithms to trading, using advanced computing to analyze large data sets and find opportunities.

Bruce Kovner (Bruce Kovner)
Expert in risk management and emotional control, knowing when and how much to trade, and employing stop loss to prevent excessive losses.

From these examples, it’s clear that success in trading requires skills, discipline, and continuous practice.

Who can become a trader?

Anyone can become a trader, but the most important thing is to have sufficient knowledge and skills, including:

• Market understanding: knowing how financial markets work and the tools used for trading
• Trading plan: having a clear plan for entry and exit points
• Risk management strategies: knowing how to prevent losses using stop loss and diversification
• Technical skills: ability to read charts and use indicators effectively
• Fundamental understanding: ability to analyze economic news and data affecting markets
• Emotional intelligence: managing emotions, especially in stressful situations

Becoming a successful trader requires ongoing education and experience accumulation. Professional traders continue to learn and refine their strategies.

Characteristics of beginner vs. professional traders

(Beginner Traders

Newcomers often have the following qualities:

Willingness to learn
Forex markets offer endless learning opportunities. Even professional traders learn daily. Beginners should start with basics, such as how to use trading platforms, analyze economic news, and practice with demo accounts.

Time management awareness
Beginners need to understand when is the right time to trade, as different currencies have different active hours.

Systematic planning
Every trade should start with a good plan. Trading without a plan makes success difficult.

)Professional Traders

Experienced traders possess:

Advanced analytical skills
They spend most of their time analyzing current market conditions, studying technical and fundamental data, and developing tailored strategies.

Self-developed trading strategies
They understand that trading strategies vary and often specialize in certain methods, such as deep chart analysis, pattern recognition, technical tools, and applying them for profit.

Expert risk management
They effectively use stop loss and take profit, and avoid overtrading beyond their risk capacity.

How to make profits from trading

Method 1: Define your trading style

Everyone has a different trading style based on their risk appetite and available time. You may need to experiment with different approaches until you find what suits you best, such as Day Trading, Scalping, or Swing Trading.

Method 2: Learn and apply effective strategies

Common trading strategies include:

• Diversification: don’t invest all your capital in a single trade
• Stop Loss: set a point to limit losses
• Take Profit: set a point to close for profit
• Trailing Stop: use a dynamic stop loss that follows price movements

Method 3: Measure and improve continuously

Beginner traders should trade slowly, evaluating results by comparing profits and losses over every 30 trades. This helps avoid impulsive decisions and allows ongoing strategy refinement.

Summary

Becoming a trader can be an exciting career path, but success requires time, effort, and continuous learning. Forex trading, in particular, demands a deep understanding of economic changes and the ability to analyze both technical and fundamental data.

Beginners can start by studying books, watching tutorials, and practicing with demo accounts before trading with real money. Having a clear risk management plan and gradually developing your trading strategies are essential steps toward mastery.