{"id":88422,"date":"2016-04-27T18:26:49","date_gmt":"2016-04-27T22:26:49","guid":{"rendered":"http:\/\/countingpips.com\/?p=88422"},"modified":"2016-04-20T18:27:34","modified_gmt":"2016-04-20T22:27:34","slug":"the-traders-job-according-to-a-trader","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/04\/the-traders-job-according-to-a-trader\/","title":{"rendered":"The trader’s job according to a trader"},"content":{"rendered":"
April 27, 2016<\/div>
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By Admiral Markets<\/b><\/p>\n

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Dear traders,<\/p>\n

I have been asked what my job is many times.<\/p>\n

To be honest, it has been very hard to explain what I and other traders do for a living.<\/p>\n

Many people don’t even know what Forex trading is.<\/p>\n

Hard to imagine right?<\/p>

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Just simplifying to the most basic explanation won’t work either, because it leads to more questions.<\/p>\n

How does one become a trader? What do you do as an analyst? What do you teach? What is the job like on a daily basis?<\/p>\n

These are all questions I have been trying to answer for the layperson who has little knowledge about the economy, let alone trading markets.<\/p>\n

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The trader’s role<\/h2>\n

If you trade Forex and equities for yourself with an account containing less than 100.000 units (e.g. EUR\/USD), you are considered a retail trader.<\/p>\n

A retail trader<\/em> speculates on different markets and trades with either:<\/p>\n

    \n
  1. his personal account; or<\/li>\n
  2. an account that was given to him by another retail trader to manage.<\/li>\n<\/ol>\n

    Then there’s the proprietary (prop) trader, who trades:<\/p>\n

      \n
    1. different instruments (Forex, stocks, bonds, commodities, equities etc); with<\/li>\n
    2. the investment firm’s own money, as opposed to a depositors’ money.<\/li>\n<\/ol>\n

      The prop trader has the complete freedom to speculate with the investment firm’s funds on all markets.<\/p>\n

      But unlike market makers<\/u><\/a>, he cannot move the market in periods of low volatility.<\/p>\n

      The amount of money that a prop trader manages is huge too – usually above 5.000.000 units.<\/p>\n

      The prop trader usually trades with a team, but does not have to share profits with a team.<\/p>\n

      He has a highly coveted position and is the most experienced – usually 10 years trading room experience behind him before assuming this role.<\/p>\n

      Now to the Institutional trader, who also usually manages relatively large amounts of capital.<\/p>\n

      Institutional traders:<\/p>\n

        \n
      1. buy and sell different markets, securities and derivatives; for<\/li>\n
      2. accounts they manage for a group or an institution.<\/li>\n<\/ol>\n

        Pension funds, mutual funds, insurance companies, exchange traded funds (ETFs), private investment funds – all common for an institutional trader.<\/p>\n

        Note that the term institutional trader<\/em> refers to the above mentioned entities and that there are also individual trader teams who trade for an institution.<\/p>\n

        So clearly:<\/p>\n

        …the term trader can be interpreted differently\u2026<\/p>\n

        …depending on the job you do.<\/p>\n

        So what’s a Forex analyst<\/h2>\n

        <\/p>\n

         <\/p>\n

        The job of the analyst is to provide analysis to different parties.<\/p>\n

        Some of them are institutional level trading desks, funds and big investors.<\/p>\n

        They also provide analysis through brokers and other platforms, into the retail market.<\/p>\n

        There are different types of analysts too, including pre-fact<\/u><\/a> and post-fact.<\/p>\n

        Pre-fact analysts are highly specialised.<\/p>\n

        Their job is to not just predict price movement:<\/p>\n

        …but also give possible levels where price should turn (possible entries)…<\/p>\n

        …with targets.<\/p>\n

        I am a pre-fact analyst.<\/p>\n

        I spend the day in front of screens:<\/p>\n

          \n
        1. watching the price action<\/li>\n
        2. coming up with trading ideas<\/li>\n
        3. letting people know what’s going on in the market; and<\/li>\n
        4. where they can enter into profitable positions.<\/li>\n<\/ol>\n

          My analysis must be very clear and concise.<\/p>\n

          Each individual will obviously have their own opinions, but I personally always stick to my guns.<\/p>\n

          There are two types of pre-fact analysts:<\/p>\n

          <\/p>\n

            \n
          1. technical analysts who analyse price action movements based on chart patterns<\/u><\/a>, candlesticks, historical vs now moment movement; and<\/li>\n
          2. fundamental analysts who analyze different micro\/macro economical bank plus institutional reports – reflecting where the big players work and the orders are sitting.<\/li>\n<\/ol>\n

            I’m a technician but:<\/p>\n

            …I always insert important fundamental views in my analysis…<\/p>\n

            …to help traders better understand the structure of price action flow and possible consequences.<\/p>\n

            And it’s not an easy job.<\/p>\n

            When trading is like war<\/h2>\n

            <\/p>\n

            Analysing the markets is not the same as trading.<\/p>\n

            Think of market analysis as a battlefield:<\/p>\n

            …where analysis is a preparation process…<\/p>\n

            …and you just scout the battlefield.<\/p>\n

            Trading is more of an into the breach type process – where you are on the frontline and survival is first on your mind.<\/p>\n

            Unfortunately, for the majority of traders the outlook is not good – they don’t survive.<\/p>\n

            Simply negating the tripod of successful trading<\/u><\/a> is enough to turn a prospective trader, into a hopeless one.<\/p>\n

            And don’t think you can live off trading a 10,000 USD account either – unless you enjoy living beneath a highway underpass.<\/p>\n

             <\/p>\n

            Determining how much money you need to start trading for a living, is critical before you decide to do it.<\/p>\n

            The biggest and most lethal mistake that traders make when they decide to go full-time, is being undercapitalised.<\/p>\n

            Not having sufficient starting capital is a recipe for disaster.<\/p>\n

            It always depends on the quality of life you choose to live and you must always have a plan B in case you fail.<\/p>\n

            So how does an FX trader’s day look?<\/p>\n

            The retail trader’s job is to carefully monitor the market, the news and price flow.<\/p>\n

            He knows his margin, has a plan, a risk threshold and a goal.<\/p>\n

            He observes the news stream carefully:<\/p>\n

            …focusing on stories of interest, observing trends, currency strengths and important releases\u2026<\/p>\n

            …then deciding when to pull the trigger.<\/p>\n

            But the main positive of being a professional trader, is broad access to tools<\/u><\/a> and info that an amateur trader generally won’t know about it.<\/p>\n

            Don’t get me wrong though.<\/p>\n

            Sometimes it’s going to be dull and you kind of struggle with what market to trade.<\/p>\n

            At other times, everything is moving at once and you’re scrambling to keep up with managing all the trades correctly.<\/p>\n

            Check out the quote on the first page of my proprietary thread<\/u><\/a>.<\/p>\n

            “Trading is like trapping.<\/p>\n

            I set the traps where I expect the best trades will be and if the pips walk into them, the traps are sprung.<\/p>\n

            If the move is too strong, then the traps automatically let the pips out.<\/p>\n

            Otherwise, it contains them until I check the traps and collect any pips that are in them.”<\/p>\n

            The feeling when you have a good trading day is simply amazing and makes up for all the less enjoyable days.<\/p>\n

            I hope this post has cleared up what a trader’s job is.<\/p>\n

            And perhaps given you some insight into the daily life of traders and analysts.<\/p>\n

            Feel free to comment in the section below<\/p>\n

            Cheers and safe trading,<\/p>\n

            Nenad
            \nArticle by Admiral Markets<\/b><\/p>\n

            Source: The trader’s job according to a trader<\/a><\/p>\n

            \n

            <\/a><\/p>\n

            Admiral Markets is a leading online provider, offering trading with Forex and CFDs on stocks, indices, precious metals and energy.<\/p>\n

             <\/p>\n","protected":false},"excerpt":{"rendered":"

            By Admiral Markets Dear traders, I have been asked what my job is many times. To be honest, it has been very hard to explain what I and other traders do for a living. Many people don’t even know what Forex trading is. Hard to imagine right? Just simplifying to the most basic explanation won’t […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-88422","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=88422"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88422\/revisions"}],"predecessor-version":[{"id":88432,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/88422\/revisions\/88432"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=88422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=88422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=88422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}