## From Zero to Expert: Everything You Need to Know About What a Professional Trader Is

The concept of **trader** refers to any individual or institution that conducts operations in financial markets with the goal of generating profits from buying and selling assets. These can include cryptocurrencies, currencies, bonds, stocks, commodities, derivatives, and stock indices. However, not everyone operating in the markets is the same. There are professional traders working within large financial institutions, retail traders trading with their own capital, long-term investors, and brokers acting as intermediaries. Understanding these differences is essential to identify your role in the financial ecosystem.

Contrary to popular belief, being a trader does not necessarily require a university degree, but it does demand market experience, a solid decision-making capacity under pressure, and a risk tolerance significantly higher than that of a traditional investor.

## The Key Difference: Trader vs Investor vs Broker

In financial markets, these three figures are fundamental but play completely different roles.

**The trader** operates with their own resources seeking short-term returns. They perform constant analysis of financial data and act quickly on opportunities. Their main characteristic is volatility: while traders seek to benefit from short-term price movements, they are exposed to higher risks.

**The investor**, on the other hand, buys assets with the intention of holding them for months or years. Although they also require in-depth analysis of companies and market conditions, their approach is fundamentally different: they seek stability and long-term growth, not daily fluctuations. The risk is lower because the time horizon is longer.

**The broker** is simply a regulated intermediary that facilitates transactions on behalf of third parties. They require formal education, an official license, and strict regulatory compliance. They do not stake their own capital; their business is to charge commissions for facilitating transactions.

## Practical Steps to Start as a Trader from Scratch

If you are interested in markets and have available capital, here are the essential steps you should take before risking real money.

### Financial Education as a Foundation

It’s not optional. You must understand how financial markets work, what factors influence price fluctuations, and why economic news move asset behavior so much. Read specialized books, follow market analysis, stay updated with financial and business news. Market psychology is as important as mathematical formulas: understanding why markets react in certain ways is key.

### Define Your Strategy and Target Markets

Before making any trade, you need to know what you will trade. Stocks? Currencies? Commodities? Cryptocurrencies? Each market has different characteristics. Equally important is that your strategy aligns with your risk tolerance, realistic objectives, and the time you can dedicate.

### Choose a Regulated and Trustworthy Broker

This is one of the most critical decisions. You need a platform regulated by financial authorities, offering robust risk management tools, and ideally providing a demo account to practice without real money. The platform should have an intuitive interface and good customer service.

### Master Technical and Fundamental Analysis

Technical analysis studies price patterns and historical charts to predict future movements. Fundamental analysis examines economic, financial, and business data behind an asset. Top traders combine both approaches to make informed decisions.

### Implement Discipline in Risk Management

This point cannot be overstated: never invest more than you are willing to lose. Set automatic stop losses (limits on losses), define realistic profit targets (take profits), and diversify across different assets to avoid dependence on a single position.

## Which Assets Can Be Traded

Financial markets offer a wide variety of instruments:

**Stocks:** Represent ownership in companies. Their prices fluctuate based on company performance and macroeconomic conditions.

**Bonds:** Debt issued by governments or corporations. When you buy bonds, you lend money and receive interest.

**Commodities:** Gold, oil, natural gas, and other essential goods are highly tradable and respond to global dynamics.

**Forex (Currencies):** The currency market is the largest and most liquid in the world, with continuous operations throughout the day.

**Stock Indices:** Represent the overall performance of groups of stocks, such as the S&P 500 or NASDAQ.

**CFDs (Contracts for Difference):** Allow speculation on price movements without owning the underlying asset. They offer leverage, long and short positions, and access to multiple markets from a single platform.

## The Main Trading Styles: Which Fits You?

There are several approaches depending on your available time and risk profile.

**Day Trading:** Open and close all your positions within the same day. Requires constant screen time and can generate high commissions due to volume of trades. Only 13% of day traders achieve consistent profits in six months, according to market studies.

**Scalping:** Make many small trades aiming for modest but frequent gains. Take advantage of market liquidity and volatility. However, it demands extreme precision: a small mistake multiplied by 50 daily trades can lead to significant losses.

**Momentum Trading:** Identify assets moving strongly in one direction and enter that trend. The challenge is recognizing when the trend begins and, more importantly, when it ends.

**Swing Trading:** Hold positions for days or weeks, taking advantage of price oscillations. Requires less time than day trading but involves higher risk due to market changes overnight and on weekends.

**Technical and Fundamental Traders:** Rely exclusively on chart analysis or economic data respectively. Both approaches provide valuable information but require a high level of expertise to interpret correctly.

## Practical Case: Momentum Trading in Action

Imagine you are a momentum trader observing the S&P 500 index trading via CFDs. The Federal Reserve announces an interest rate hike. Historically, this pressures stocks because it makes credit more expensive.

Your technical analysis confirms the market is reacting downward. You decide to open a **short position** (sell) in CFDs of the S&P 500 to benefit from the decline. To protect your capital:

- **Stop Loss:** Set one above the current price (say, 4,100 points) to limit losses if the market recovers.
- **Take Profit:** Set one below (say, 3,800) to secure gains if it continues falling.

You sell 10 contracts at 4,000 points. If the index drops to 3,800, your position closes automatically with profits. If it rises to 4,100, it also closes, but with limited losses.

This disciplined approach is what differentiates profitable traders from the 87% who lose money consistently.

## Essential Tools to Protect Your Capital

Any regulated trading platform should offer these instruments:

**Stop Loss:** Automatically closes your position when reaching the maximum loss you tolerated.

**Take Profit:** Secures gains by closing the position at your set target.

**Trailing Stop:** A dynamic stop loss that adjusts with favorable price movements.

**Margin Call:** Alerts you when your margin falls below a certain threshold, forcing you to close positions or deposit more funds.

**Diversification:** Don’t put all your eggs in one basket. Spread risk across different assets, markets, and strategies.

## The Uncomfortable Reality of Trading

Here are the numbers you should know before starting:

- Only **13%** of day traders achieve positive consistent profitability over six months
- Only about **1%** maintain gains over five years or more
- Nearly **40%** quit in the first month
- Only **13%** persist after three years

These figures are based on rigorous academic studies. Trading is not a shortcut to get rich; it is an activity that demands discipline, continuous education, and mental resilience to handle frequent losses.

Moreover, the market has changed. Approximately **60-75%** of trading volume in developed markets now comes from automated algorithmic trading. This means individual traders compete against machines executing trades in milliseconds. It’s not impossible, but the advantage is decidedly against retail traders without access to cutting-edge technology.

## Final Recommendations

**Trading is viable as a secondary income, not as the sole income.** Keep a primary job or a stable income source. Never invest more than you can afford to lose. Consider trading as an activity that requires years of practice before becoming truly profitable.

Start with a demo account on a regulated broker. Practice your strategies without real money for months. Learn from your mistakes when the only thing you lose is your ego, not your money.

The combination of solid education, risk management discipline, well-defined strategies, and realistic expectations is what separates successful traders from the 87% who lose money.

### Frequently Asked Questions

**Where do I start if I’ve never traded before?**

Educate yourself first on how markets work. Then open a demo account with a regulated broker. Practice your strategy for months without real money. Only after, when you feel confident, start with small capital you can afford to lose.

**What features should a good broker have?**

It should be regulated by official financial authorities. It must offer competitive spreads, transparent commissions, an intuitive platform, robust risk management tools (stop loss, take profit), responsive customer service, and access to multiple markets.

**Can I trade part-time?**

Yes. Many traders start this way, trading in their free time while maintaining a full-time job. However, it requires genuine dedication and constant study. It’s not something to do “once in a while.”

**What is the minimum capital to start?**

Technically, as little as $100 some brokers. But realistically, you need at least $500-$1,000 to manage risks properly with reasonable position sizes.