Who is a trader?

Trader (Eng. Trader) a person engaged in trading on the exchange. Literally, the word translates as "merchant". This term is usually used in the meaning of a specialist engaged in trading currency, stocks or commodities on the stock exchange. In fact, traders are engaged in speculative activities they buy an asset cheaper, sell more expensive, or vice versa. At present, this is the name of any person who earns money on the stock exchange, incl. when it comes to trading on the stock exchange, Forex market or cryptocurrency exchanges.

Traders are Professionals and Amateurs

As in any business, there are professionals, amateurs and beginners in trading. The last two categories are directly related to all those who trade in financial markets.

Professional traders are specialists who have chosen trading as their main way of earning. They can be divided into those who work for the company and those who work for themselves. Traders working in a bank or for an investment company received appropriate training, received the necessary knowledge and skills, and then got a formal position. As a rule, they work in banks, insurance companies, investment funds and various financial institutions. They perform speculative operations in the market in the interests of the organization or its customers with the involvement of company capital. As a rule, they do not have direct personal income from trading; maximum bonuses are based on trading results.

Traders who engage in independent speculative activities often have not undergone special training and trade on their own (or investor) funds. Moreover, their earnings can be much higher than that of traders working for the company. Private traders often work without special licenses and do not have professional economic education. The only requirement for such a trader is talent (a sense of the market). You can also highlight the ability to resist stress and trade according to your own trading system.

Lovers. This group is many times larger than the first. There are millions of different people around the world who share a passion for stock trading. In recent years, the availability of trading has increased significantly. Previously, only wealthy people with impressive capital had access to the exchange, now everyone can try their hand at speculative activity. On the Internet there are many cryptocurrency exchanges and Forex brokers, as well as offices providing binary options trading that offer favorable conditions for cooperation.

Most often, amateurs lose money when trading, only increasing the income of market professionals.

Separate types of traders. Often traders work in the market not for profit, but for the performance of their duties. For example, selling on a stock exchange the company's proceeds for the subsequent acquisition of foreign currency, which will be used to pay salaries to employees. Or purchase through the commodity exchange of the necessary raw materials. Professional traders who are able to predict the course of prices also earn on them - while all win.

Hedging traders. Very often people come to the market not for earning, but for hedging currency risks in their main activity. For example, a professional freelance programmer who lives in Turkey has an order in Switzerland. He earns 15,000 Swiss francs per month - at current prices it is 54,000 lire. And this is enough for life while he is afraid that with an unfavorable price movement he may receive in the future not 54,000 but 52 or even 50 thousand lire - and he does not want to risk it. He goes to Forex and hedges risks by selling a pair of Turkish Lira / Swiss Franc. Then, when the lira falls, it earns the equivalent amount on Forex (and when it grows, it loses). Thus, he can be sure that his profit will consistently be 54,000 Turkish liras.

Accordingly if you are a market professional you can make money on it. A prerequisite is leverage in order not to deposit a large amount of funds on the exchange.

Another, more interesting example is if he got 20 bitcoins for his work. According to the contract he must return the funds in case of poor work and does not want to spend them then he can simply put part of the money on the cryptocurrency exchange (really high-quality exchanges give a leverage of 1:10) and again - sell them against the dollar then whatever happens he will win. If the rate grows sharply, then it will receive more from the sale of the remaining 18 bitcoins, but lose on the exchange. And if the rate drops sharply he will lose the price of the remaining 18 bitcoins but he will win on the exchange. Thus he recorded his income in dollars without selling bitcoins.

Thus, we again see that speculative traders play a very important role in the financial life of the exchange and receive money not from the air - but through insurance of other market participants, or redistributing financing in favor of more efficient companies.