How to Become a Professional Trader?

After learning more about the world of trading and getting real money from your trades, you might start thinking about becoming a professional trader. But what makes a professional trader? Well, professional traders obviously make trading their full-time career. These people understand finance and business and apply their knowledge to earn money from financial markets. They spend a lot of time analyzing current market conditions, developing trading strategies specifically tailored for the asset they specialize in, and implementing them to profit from successful trades.

Professional traders can conduct trades within a single day (day traders) or within the span of several days (swing traders). Each trading style has specific appeals, and professional traders can choose what they want to specialize in.

In this article, you will learn more about what a trader needs to know to make a career out of trading, potential salary expectations, and prospects a professional trading career can give you in the future.

Key takeaways

• Professional traders make trading their full-time job and can work for a company or be self-employed.
• Professional traders need to understand how financial markets work and learn how to develop their own strategies and techniques to ensure successful results.
• The trading industry is expected to grow during the next decade, so now is an excellent opportunity to become a professional trader.
• Working for a company as a professional trader is more stable, whereas being a self-employed trader allows you to organize your work environment according to your wants and needs.

How to become a professional trader

There are a lot of things you need to know before deciding to become a professional trader. Professional traders don’t rely on luck or some vague understanding of how financial markets operate. They analyze many aspects of each particular trade before making decisions, which makes them different from amateur retail traders. So before you quit your job to pursue professional trading, make sure to learn the following things.

Learn the basics of trading

You can’t start trading professionally without a solid understanding of the basics. This includes information about the existing financial markets, the movement of prices, essential trading tools and indicators, how much initial capital is needed for trading, what kind of charts are used by traders, and when is the best trade. This information can be found both online and in many bookstores. You can even find free courses for beginners with everything you need to know to understand what trading involves. FBS Trade also has a Guidebook that helps both beginners and more experienced traders to learn more about Forex and trading, in general, every day.

Learn the advanced basics

After learning the trading basics, professional traders should focus on expanding their knowledge. For instance, if you decide to trade Forex, you need to learn about currency quotes, points, Forex trading strategies, and other helpful information. Learning more about one particular market can help you become an expert and make professional trading easier. Similarly to the trading basics, you can find information about the advanced basics online and in books and take a more advanced course about the market you’re interested in.

Develop trading strategies and techniques

The next thing every professional trader has to know is what trading strategies and techniques there are and how to apply them in real-life trading. This includes learning about price charts and chart patterns, technical analysis tools, bullish and bearish trends, and how to use them to develop a successful trading strategy.

In this case, free online resources won’t be as helpful as they tend to describe more generic strategies and techniques without going into details. To learn more advanced and efficient strategies, you might need to consider finding a professional trader to give you lessons or advice on the topic (not for free). It’s common practice to see how other professional traders approach trading and then build your own trading strategies based on their successful experiences.

Gain trading experience

Theory is great and can give you a lot of helpful information to start trading, but the actual knowledge and experience come from trading within a real market. This is when you should test your initial strategies and techniques and see what works best for you and what you can adjust to prevent losses or amplify your gains.

Consider paper trading

It’s common knowledge that trading real money is very stressful, especially if you’re just beginning to trade. Things can quickly turn sour and leave you without any profit and, sometimes, with significant debt. That’s why some trading platforms use paper trading as an option. Paper trading is simulated trading that lets novice traders practice trading with non-real money using real market price movements. This helps traders to see how their current strategies and techniques would play out in real life without risking their own money. 

Choose a reliable broker

Brokers are proxies that connect traders with financial markets, then match and negotiate trades between different parties across these markets. Beginners can use brokers to learn about new trading strategies and techniques and incorporate them later in their own trading style.

But before you choose a broker, make sure that it’s reliable. Check its credentials and whether a reputable agency regulates it before entrusting your money.

Learn to focus

If you decide to become a professional trader, you need to understand that trading requires focus and commitment, just like any other job. You have to constantly monitor price movements to find the best possible moment to enter or exit a trade. You won’t achieve high results if you constantly get distracted from your trades and might incur losses. So don’t take professional trading as vacation and focus on ensuring all your trades are in order.

Understand risk management

Trading can be risky, especially if you’re trying leveraged trading and not using your own funds. You need to think ahead and prepare risk management strategies. Risk management means identifying potential threats and finding ways to avoid them. These include determining the amount of money you’re comfortable losing if something goes wrong, determining the best markets to trade in, placing price targets to secure earnings and stop-loss orders to cap potential losses, and using technical analysis tools and indicators to predict market trends in the future. Risk is always a part of trading, but how well you deal with it is only up to you.

Understand your potential

It’s also important to consider the amount of money you’re ready to invest in trading. This will help you build a trading strategy more suitable for your current financial situation and find out which decisions are currently financially feasible for you. The longer you trade, the more potential profit you can expect to gain. Understanding that it might take a while can save you from getting discouraged.

Consider keeping a trading journal

Every successful professional trader keeps detailed records of all their trades, whether they were successful or not. Keeping a trading journal is a great way to analyze which strategies and techniques have proved successful and which require more adjustment. The most common things to record in your journal are dates of each trades, time frames, lot sizes, buy and sell prices, profits, losses, and other information that you think may be useful for future reference.

Review your trades

Reviewing your trading results will help you determine which factors contributed to successful outcomes. Understanding why exactly your successful strategies worked can help you see if these same strategies can be applied to your other trades and bring more profits all around.

Consider earning a degree

Having a degree in the financial field isn’t necessary to become a professional trader. Still, it can be very useful as it gives you a great understanding of how financial markets operate and what you can do to optimize your trades. Moreover, a degree can help you receive credentials to expand your professional trading experience and find employment for a company.

Salary for a professional trader

When it comes to salary, it can vary greatly. Depending on the location, place of employment, experience, and skill, professional traders in the USA can make anything from $50,000 to $160,000, with the average salary landing at $91,000. In addition to a fixed salary, professional traders can also get up to $25,000 in commissions. As for benefits, most traders generally get insurance, family leave, paid time off, flexible schedules, and opportunities to work from home.

Job outlook for a professional trader

At the moment, the trading industry is expected to grow over the next decade by 4–6%, despite an earlier decline in demand. This is good news for everyone thinking of becoming a professional trader. As a matter of fact, now is a great time to become one and make as much money over the next decade as you can.

Skills for a professional trader

Of course, professional traders need to possess specific skills to achieve success in this field. They include:

• analytical thinking,
• research,
• record-keeping,
• patience,
• focus,
• financial knowledge,
• intuition,
• stress resistance,
• adaptability.

Luckily, these skills are not hard to acquire, and anyone who has had basic work experience already possesses most of these skills and can try applying them in professional trading.

Work environment for a professional trader

Work environment for professional traders can vary significantly, depending on whether you are self-employed or work for a company. Self-employed traders can build their own schedules around their lifestyles. They can work at any time of day and from anywhere worldwide with a stable Internet connection. Self-employed traders need computers or laptops and might need additional equipment to make their work more convenient.

Professional traders employed by companies usually have to work fixed hours, though this doesn’t apply to all companies. They can work in an office building or from home. Even though self-employed traders have more freedom to customize their work environment, professional traders get benefits from their place of employment, such as paid time off, sick leave, bonuses, etc.