Let's just clarify what is meant by the term trader, sometimes called retail trader or day trader.
This is an individual who trades the financial market whatever they may be using their own money. They may or may not be dependent on the results of their trading for their income. This does not include professionals who work for institutions or who manage other people's money. It does not include anyone who gives advice that is charged for.
One of the reasons that I want to make this point clear is that many new traders that I have met fall into the trap of listening to too many people who have never traded their own money.
Many institutions have what they term trader's working for them. The reality is that these people are often no more than someone executing an instruction given to them by the client.
They don't have any analytical capabilities other than what is provided to them by their employer.
Unless you have experienced winning and losing your own money based on your own decisions you will never fully appreciate what the retail trader is going through.
It's sort of the difference between being the manager of a company and being the owner of a company. For those of you have experienced the difference you will know exactly what I am talking about.
I don't mean to take away anything from the many professionals out there who offer excellent services and have long and distinguished careers in the industry. I only wish to point out that there is a great difference between the mindset of the two groups.
Someone working for a large institution who is called a trader is very far removed form the guy sitting at his computer all day making decisions that effect his bank account.
You will only ever be successful as a trader if you rely on your own judgment to trade. At the end of the day it's your money. I would go one step farther and divide day traders into three groups:
1. Individuals who have a small amount of money and have read or listened to someone who has told them that there is lots of money to be made trading.
2. Individuals who have a fair amount of money and want to try something new. They may look at trading as another business venture and expect to have to invest for a return on their money
3. Wealthy individuals who are looking for ways of increasing or diversifying their portfolio. They may be looking at ways of earning more money from their money with less investment e.g. leverage.
Traders come from all walks of life, everything from company directors to bricklayers. Some trade full time and others trade part time whilst holding down full time jobs.
Generally they would have taken some courses on technical analysis or some technique that someone was selling and founded their decision making process on that.
They would then allocate a part of their house or office for this purpose, set up a computer and away they go.
Many, as I did, paid thousand of dollars for courses only to find out that the method they paid for didn't work.
The problem is when you start trading: you don't know any better and will usually pay for the course with the best marketing not the best content.
Author Resource:-
Martin Chandra is a full-time investor. He has been researching investment strategies and make his own living. For more information please go to here.
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