Many people do not know the real job of a professional trader in CFD Trading? They think that pro traders merely reap money very easily. But what do professional traders really do?
Table of Contents
The Types of Traders
Before anything else, you should know the type of trader that you want to become. There are two types of traders – institutional trader and retail traders.
Retail Traders
They are a group of traders who have many categories and subcategories. But at the end of the day, they are referred to as retail traders. They are the traders that get fed up when they are losing and also the ones who push through to become successful.
When you become successful, you start to have your own brand, and then you can start influencing others through your story of success. Retail traders are also able to earn through social trading.
Pros
- You are free to use any trading strategy that you think will work best on your trades.
- It becomes your alternative income.
- You are allowed to trade in any market.
Cons
- You are risking your own money.
- There’s no guarantee that you will earn.
- There is a high rate of failure.
Institutional Traders
Institutional traders are traders who are employed by huge companies, brokerage firms, and investment banks to execute trades. You are guaranteed to have a fixed salary on this job and also a hefty bonus if your performance is good on year end.
But this job puts you under huge pressure and forces you to take huge risks. As the trader, you are tasked to risk your firm’s money in the financial market. And if you fail to get the right speculation on the price movement, you will be fired easily.
Pros
- You get to have a fixed salary and bonus for good performance. The income is guaranteed.
- You get to work with experienced traders.
- You have the support of the analyst department.
Cons
- You are obliged to follow orders.
- There is high competition in this kind of work. It will be hard to get yourself hired.
- You may encounter fat finger deals.
Starting To Trade
No matter the type of trader you are, you have a definite path to take and the first step of becoming a trader is to know the basics of trading. After gaining the basics of trading, it is time to test your knowledge in the demo account just to be sure that you are prepared to start trading.
Learning the Basics
At some point in time, every trader can reach temporary success. However, being a profitable trader that goes on for a long time is a different story. It can only be achieved through knowledge in the market and experience which serves as the best teacher.
Testing Your Trading Skills on Demo Accounts
After learning some knowledge about CFD trading, it is time to gain some experience in the safest place you can be in as an inexperienced trader – the demo or simulation account. Most brokers offer these demo accounts to traders so they can check out their services. This is also the best place to practice trading without minding the risks you incur every time you lose.
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