Being a trader is just amazing. You get to work your hours and be a millionaire before you hit 30. Well, that is the popular notion that persists. However, being a trader comes with a lot of challenges and caveats that financial influencers and bloggers do not talk about.
However, we are not going to do that. In this article, we will be looking at the crucial steps you must take as a trader to become relevant. So, stick around as we take you through five critical steps that can help you.
How To Be a Trader in Just Five Steps?
Being a trader involves following a specific methodology. You can try to gung-ho things, but that will not work out. In this section, we will primarily look at some of the steps that you will have to follow. So, let’s go!
Step #1: Understand The Type You Want to Be
The first step of being a trader is understanding the right type for you. As a trader, you will be given a lot of options to play around with. The best way to proceed to the next step is to understand the right type for you.
Every form of trading has its payoff. Therefore, understanding this payoff is very important. Here is a brisk table that might help you understand the nuances with more clarity:
| Trading Style | Relative Volatility | Time Frame |
| Swing Trading | Moderate | A few days/weeks/months |
Long-Term Trading | Low to Moderate | More than a year |
Day Trading | High | 24 hour or Intraday |
This small list should help you understand your options and the kind of payout they offer.
Step #2: Picking The Broker
As a trader, you must pay off a certain amount of money as brokerage. This is an essential part of the process. Again, a little bit of research goes a long way. Here is a brisk look at how brokerages differ from one trading style to another:
- Day Traders: Day traders generally require real-time data and low-latency information. Such traders also require Level 2 quotes that require liquidity information as well. Therefore, opt for brokers that offer similar features.
- Swing Traders: Swing or position traders require fundamental analysis tools, risk management features, and mobile trading opportunities. Therefore, look for specific traders who offer similar services.
- Long-term Traders: Long-term traders require a user-friendly interface and an automated interface approach. They also require diversified portfolio management.
Step #3: Opening The Account
The third step is quite straightforward. Once you have picked the right form of trading and broker, you must focus on opening an account. The process is generally straightforward and should not take more than 10 minutes. Here are some details that you will have to feed:
- Personal information: You must provide personal information such as name, address, etc. The government requires this, so be accurate and careful.
- Choosing account type: This task is straightforward if you already know what you want. Still, read the fine print before committing to anything.
- Complete the application: Just follow the instructions, and you will eventually complete the application process in no time.
- Fund the account: To start trading, you must fund your account. To do this, you need to select your bank account and ensure that it is linked to your brokerage account.
Step #4: Researching Stocks & Mentors
Now comes the complex part. Understanding how stocks work is the fourth stage of trading, and it is a very important part of the process. However, due to the nature of the landscape, things can feel too overwhelming at first.
If a mentor is too much, then you can also take aid of platforms that bring you the latest market news. This will help you build an idea about the market movement.
Step #5
A mentor will not only help you pick the right stocks but also help you understand the buying and selling part of the conversation. The trading rules are simple: you buy when the prices hit rock bottom and sell when they peak.
Then again, these are the basics and can change according to the requirement. For example, if you are a day trader, your day-to-day trading strategies will be more nuanced than those of a long-term holder.
The End
Being a trader is not a linear task. The money market is constantly evolving and changing how it functions. Hence, understand this small caveat. The best way to maximize profits in trading is to keep at it.
Persistence can truly help you to maximize your profits and minimize risks. Hence, be patient and let the market take its course.
