By Chris Chevrolet January 12, 2023
In TV shows and movies, traders are often shown in trading rooms with lots of monitors displaying charts and news feeds. They’re always on the phone, frantically tapping away at their keyboards, which highlights the intense and fast-paced nature of their work. In cinema, representatives of this profession are eccentric, control huge financial flows, foresee crises, and make fortunes from them. Trading in real life can look completely different. In this report, we figured out what trading is, how private traders work, and what you need to do to become one.
Artem Nikonov, a gifted private trader and outstanding investor with seven years of experience, an active member of the international business association Alliance Top Association, and a guest member of the jury for the international competition Trends in Fintech, Insurance, Blockchain by Astra Global (2023, Switzerland), answers our questions.
– Artem, tell us what a broker is and what is the difference between a trader and an investor?
– In simple terms, a broker is an intermediary between a person and the market. Without a broker, it is impossible to sell or buy shares. They provide access to the exchange, store your assets, perform calculations and transactions, etc.
Trader and investor are terms that refer more to the approach or strategy used in the market. Traders usually work in short intervals and can make several trades a day. They react quickly to market changes. Investors, on the other hand, invest for the long term, for example, in the two-year development of a company.
– What is the difference between the financial and stock markets?
The financial market is a fairly broad concept, as it encompasses the stock market, the currency market, the commodity market, and the debt market. Thus, interested parties exchange money, loans, and securities on the financial market. The stock market is part of the financial market. Stocks, bonds, and funds are available for sale or purchase on the stock market, acting as instruments that can be used to become a co-owner of a company or invest in its debt.
– What securities and instruments can a market novice start with to practice, understand how the market works, and subsequently build expertise and develop their future strategy?
– I recommend taking your time and starting with the simplest and most reliable securities: bonds and stocks of large companies. The former clearly show the return and risk. The latter give an understanding and idea of how different companies behave in the market.
Through index funds, for example, you can see the movement of the market. This is also a good opportunity to practice and get a feel for the dynamics without unnecessary worries. You need to try to understand how the market works and how it reacts to information, global events, reports. No need to get your money fast. Many people know that the symbols of the stock market are the bull and the bear. Tell us what meaning lies behind these animals. The bull represents growth, while the bear represents decline. Are there other “animal” symbols used in professional circles? If so, give an example. In professional jargon, a “swan” refers to an unforeseen event that has a strong impact on the market.
– The main question: how do you become a trader?
You don’t need any special diplomas or licenses to become a private trader. Choose a reputable broker — as a rule, all major banks have them — register, and you’re ready to go. At the initial stage, a regular phone is sufficient as equipment.
– What is the best starting capital if you are a beginner? So that you don’t get upset about losses later.
– An amount that you don’t mind losing: my experience shows that losing your first deposit is almost inevitable..
– What books on trading would you recommend reading?
– I was inspired by Benjamin Graham’s The Intelligent Investor and Peter Lynch’s One Up on Wall Street. I also find Alexander Elder’s How to Trade and Win on the Stock Market and Mark Douglas’s Trading Psychology useful. Ed Seykota’s materials on systematic trading are also quite helpful.
There are many books published on the subject of trading, some of which are really worth reading. The main thing to understand is that books will not teach you how to make money. Real skills can only be acquired through financial losses and long hours of practice.