What are the activities of modern traders

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What do modern traders do?

The growing popularity of online stock trading, which is observed in almost all countries of the world where it is possible to use the Internet, has caused an increased interest in financial markets and everything connected with them. However, many Internet users, having learned that practically anyone can engage in this type of activity, decide to master the profession of a trader. Naturally, the first question that interests them is related to the responsibilities of this subject of the global financial market. But many future traders are faced with a problem: the lack of economic education, which becomes a serious obstacle for those who want to independently deal with this type of activity. This review will help to understand what a trader is doing and how he makes money, even to readers who have never heard of online trading.

About complex things in simple words

The first thing a novice financial asset trader should know is the difference between a trader and an investor. Some sites contain articles in which the authors do not distinguish between these important categories. The investor invests money in the development of enterprises or the implementation of commercial projects. That is, his investments really “work” and make a profit, part of which he receives, according to the concluded agreements.

A trader is a trader, a speculator who does not produce anything and does not invest money in the real sector of the economy. Its profit arises from trading, more precisely, as a result of changes in the value of assets (currency, securities, raw materials or precious metals). Readers who lived in the era of socialism, most likely, the word “speculator” is alarming. But, in fact, there is nothing wrong with it. Speculation is a legitimate activity, and it also benefits the economy. Thanks to traders and their operations, the real exchange rate, the value of shares and other valuable assets are maintained.

Another important participant in online trading is a broker that performs the function of a link between a trader and the financial market that interests him. In other words – an intermediary who makes his profit on the price difference (spread) and at the expense of the most diverse commissions (honest and not so) that the trader pays. Brokers can take money for carrying out almost any operation, for example, for withdrawing funds from online traders, or because a trader has not used his account for a long time.

All markets that allow a trader to earn are classified according to their specialization. Forex deals with the conclusion of foreign exchange transactions, the stock market – with shares, and commodity – with raw materials. The choice of what and how to buy / sell depends on the personal preferences of the trader.

A separate topic is the most popular lately binary options. It sounds very serious, but in fact this type of trading can be considered one of the easiest. Depending on the type of option, the trader must determine how the value of the goods will change over a certain period of time. It will remain at the same level, go up / down, reach a specific value, etc.

Each decent broker offers its users the following services:

● be trained by studying educational materials;

● test your strength using a demo account (allows you to enter into transactions for virtual money);

● provides an opportunity to study charts, a trader’s calculator, trading signals, analytical information, etc., in order to use them to make your own forecasts for making profitable deals.

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Practice shows that if a potential trader has the ability to this type of activity, he will definitely learn how to make money in the financial markets. The main thing is to never be in a hurry, not to trust questionable proposals and to study well the assets that he plans to deal with.

How to make money

In addition to the main source of income (asset trading), the trader has additional ways to make money. Most often, this is an affiliate program. Its essence is to bring to the project an active user. For this, the broker pays a certain reward. Market administrators can pay a fixed amount, as well as part of the profits that a new user has brought to the broker or calculate your income in a mixed manner.

Some users make deals only on certain dates or after the occurrence of important political / economic events. As an example, one can cite: a rise in prices for strategic raw materials, elections in the USA, exit of a certain country from the EU, etc.

There are also methods based on mathematical calculations. But for this you need to have a good start-up capital, diligence and attentiveness. For example, the same product is taken. You need to find two trading platforms that will make money if you put one on a raise, and the other on a lower asset value. Sometimes it turns out, if you correctly calculate the amount of rates and fees.

The main mistakes of newbies and experienced traders

In any field of human activity, there are certain mistakes that even professionals make, not to mention newbies. Traders in this case are no exception. Novice members of online trading are often in a hurry to choose a broker, too trusting his promises or feedback on specialized resources. This can lead to a loss of total capital. When choosing a trading platform, you must pay attention to the following things:

● “Age”, the older, the more likely it is a real broker.

● Licenses of reputable regulators.

● Comments from experienced traders who are reputable in the world of online trading. It is better not to pay attention to the reviews of unknowns by John, Maria, Anton.

Another common mistake that even experienced traders make is the desire to cover as many assets as possible. Of course, if an event has happened, and you manage to make a profitable deal even in the direction where you have never worked, then you can earn money, but you shouldn’t grab everything every once in a while.

The inability to correctly assess the possible profit and risks associated with its receipt, often failed, as experienced traders and their novice colleagues.

You should not work if you have any troubles or important unresolved issues. In such situations, even the most attentive bidders make mistakes.

Do not forget about the statistics. And do not just record closed deals with all related events, but analyze them as often as possible, compare them with similar situations, draw appropriate conclusions and, of course, test the result in practice.

Many newcomers sometimes ignore such a factor as bad internet, unstable connection. Such an error can have disastrous consequences. Remember this and always work, following all the above recommendations, then your chances of succeeding in such an exciting business as online trading will increase significantly.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

Modern Trade vs Traditional Trade: A Logistics Management Overview!

Traditional (or general) trade is more prevalent in Asian countries than in North America. However, things are rapidly changing, and unorganized pockets of distribution networks are becoming more and more organized. To continue further, it is important to understand how traditional trade differs from modern trade in terms of distribution and logistics management.

Traditional Trade

Traditional trade is associated with a spread-out distribution network of small retailers, dealers, stockists, wholesalers, and distributors. Its an intricate network which serves localized customer demand through regular orders with short lead times and varying fill rates. Fill rate (fulfillment rate) is the immediate customer demand which can be met with in-stock inventory. It is also calculated in terms of the total order delivered out of the total orders requested. Lead time is the time it takes for a delivery to fulfilled once the order is successfully recorded.

Demand is assessed and interpreted by the retailers and the order is placed. Sometimes, the field agent taking the order is accompanied by the delivery person (in the delivery vehicle) and the order is filled right there.

Traditional trade builds on inter-personal relations between the customers and the retailers. Even the retailers interact in more personal and direct manner with the field agents. The field agents take the orders on behalf of the distributors. The distributors fill the order with a lead time of a day or two. The distributors, in turn, deal with the manufactures to maintain adequate inventory to keep up a healthy fill rate for the orders. The credit cycle extended to these retailers is often short.

Traditional trade is prone to erratic demand which leads to empty shelves or the need to push alternate products onto the customers. This, in turn, leads to quick and ad-hoc orders which put a strain on the schedule planning and last mile delivery for the distributors.

Modern Trade

Modern trade involves a more planned and organized approach to distribution and logistics management. Modern trade includes the larger players such as supermarket chains, mini-markets (Indonesia), hypermarkets, etc. This involves aggregation of demand across a diverse product range.

Some of the key differences are:

Metric Traditional trade Modern Trade
Demand Erratic or Seasonal Consistent (Interim promotions)
Customer interaction Personal (retailer hands out the products to the customer) Customer can pick and choose the items and then proceed to check-out. This gives the benefit of choice to the customer, where they can evaluate multiple products side-by-side
Order placement Based on current stocks Strategically planned to meet promotional demands
Lead time Short – Direct Structured (preempted)
Product range Limited Extravagant
On-time deliveries Comparatively lower focus Comparatively higher focus
Order fulfillment time Can be accommodated at different times Has to be specific to pre-decided time-slots (missing which might raise a penalty on the distributor)
Economies of scale Goods traded on MRP Retailers can absorb cost and give promotional discounts to drive purchases
Credit cycle Short Long (customized)

The main difference, as you might have seen, is that the distribution is more organized in modern trade. These retailers often deal directly with the manufactures. Many large supermarket chains have vertically integrated to offer their own brands in groceries and apparel. The focus is on giving the customer a good buying experience and value for money. And to sustain this, they require a potent logistics management system backing them.

Modern retailers maintain their fill rate above their safety stock (minimum stock they require to fulfill immediate demand, and which is also a trigger to reorder the product) to balance the inventory along the economic order quantity (minimizing carrying and ordering cost while increasing total demand fulfillment). This requires them to be particular about their delivery windows. They have clear time-slots for each product replenishment and they often penalize distributors if the delivery time-slot is missed or delayed. Since the modern retailers occupy a sizeable business for the distributors, the distributors (or manufacturers) turn to technology to support better schedule and route planning for their deliveries.

Last Mile Delivery Enabling Retail Transformation

Traditional trade occupies close to 90% in key developing markets. By leveraging cloud-based technology, last mile delivery can be optimized for such distribution networks, bringing in organized patterns within the industry.

  • Schedule planning of field agents’ visits can be done through intuitive machine-learning backed algorithms. The planning engine would suggest the best journey plan for the agents. For example, if each visit to a retail outlet caters to only one product category, then the field agent can be trained to be well versed in that category and drive higher revenue for the distributor. Similarly, each other day the retail outlet would be visited a different field agent with a different product category. This would control the order taking process and lead times within the network. It would also better the relationship between the retailer and the category-specific field agent.
  • Route optimization for the field agents can help them cater to more outlets in a single day. This would increase field resource utilization and drive overall product category revenue.
  • Once the order is processed, the distributor (or manufacturer) can plan the delivery schedules to sustain the promised lead times and fill rates across the distribution network. Considering the specific delivery time-slots for each retailer, the distributor must maximize the capacity of the vehicles while ensuring on-time delivery for all the handover points.
  • Capacity optimization of the vehicles brings down overall logistics movement costs while increasing resource utilization.
  • Optimization of delivery routes can further help ensure on-time deliveries by avoiding local traffic conditions. Fastest routes with minimum distance traveled while fulfilling deliveries at multiple retail outlets can bring down over fuel consumption.
  • Crate and unit level tracking of each merchandise by electronically recording the details within a logistics optimization system such as LogiNext Mile, at the time of loading and unloading helps bring transparency in the delivery process.
  • Real-time tracking of each vehicle helps distributors be more agile and responsive in case of any delay or detention.
  • Validation and authentication of each delivery through electronic proof of delivery help reduce invoice-based errors and streamlines the credit cycle.

Optimization of the distribution network can help organize traditional trade and generate more value for all the stakeholders involved namely the retailers, the distributors, the manufacturers, and the end-customers.

A Day in the Life of a Day Trader

Traders participate in financial markets by buying and selling stocks, futures, forex, and other securities, and by closing out positions with the intention of making small, frequent gains. Just as there are many types of investors, there are many types of traders, ranging from the small, independent trader working from a home office to the institutional player who moves tens or hundreds of millions of dollars worth of shares and contracts each trading session.

Key Takeaways

  • Traders participate in markets through buying and selling securities; day traders, by definition, usually enter and exit positions in a single day.
  • Day trading can happen in any marketplace but is most commonly seen in the stock markets and foreign exchange (forex) markets.
  • Day traders use leverage and short-term trading strategies to profit from small price movements in liquid, or heavily-traded, currencies or stocks.
  • Discretionary traders make manual trades based on research, while system traders allow computer programs to automatically execute trades.
  • When traders are not buying or selling, they monitor multiple markets, research, read analyst notes or media coverage on securities, and swap info with other traders.

Traders and Trading Styles

Traders are further defined by the time frame in which they open and close positions (the holding period) and the method by which they find trading opportunities and send orders to the market.

Discretionary traders are decision-based traders who scan the markets and place manual orders in response to information that is available at that time.

System traders, on the other hand, use some level of automation to implement an objective set of rules, allowing a computer to both scan for trading opportunities and handle all order entry activity. The chart below lists the different trading styles with the corresponding time frame and method for each.

Trading style Time frame (holding period) Method
Position trading Months to years Discretionary or system
Swing trading Days to weeks Discretionary or system
Day trading Day only – no overnight positions Discretionary or system
Scalp trading Seconds to minutes – no overnight positions Discretionary or system
High-frequency trading Seconds to minutes System only

Because of this diversity among traders, there really is no such thing as a “typical” day in the life of a trader. It is also hard to determine the average rate of return for a day trader. With that in mind, let’s take a look at what a day may be like for an individual, discretionary day trader since this is where many people begin trading.

Pre-Market

Before the markets spring to life at 9:30 a.m. ET, most day traders are busy catching up with coffee and breakfast in hand on any events that happened overnight that could affect that day’s trading session. This involves reading stories from various newspapers and financial websites, as well as listening to updates from financial news networks, such as CNBC and Bloomberg.

The futures markets, as well as the broad market indexes, are noted as traders form opinions about the direction they expect the market to trend. Traders will also review economic calendars to find out which market-moving financial reports – such as the weekly petroleum status report – are due that day. It should be noted that many traders participate in round-the-clock markets, such as futures and forex, and these traders can expect increased volume before the rest of the markets open at 9:30 a.m.

After reading about events and making note of what the analysts are saying, traders head to their workstations, turn on their computers and monitors, and open up their analysis and trading platforms. Many layers of technology are at work here, from the trader’s computer, keyboard, and mouse, to the internet, trading platform, broker and ultimately the exchanges themselves. As such, traders spend time making sure that everything on their end is functioning correctly before the trading session begins.

If everything is working properly, traders start scanning the markets for potential trading opportunities. Some traders work just one or two markets (such as two stocks or two e-minis), and they will open up these charts and apply selected technical indicators to see what’s going in those markets. Others use market-scanning software to find securities that meet their exact specifications. For example, a trader might scan for stocks that are trading above their 52-week highs with at least 4 million shares in volume and a minimum price of $10. Once the computer compiles a list of stocks that meet these criteria, the trader will put these tickers on his or her watch list.

Day traders typically complete their trades within the day and avoid holding positions overnight, with the exception of the Forex Market.

Early Trading

The first half-hour of trading is typically pretty volatile, so many (but certainly not all) individual traders sit on the sidelines to give the market time to settle and avoid being instantly stopped out of a position.

Now it’s a waiting game, while traders watch for trading opportunities that are based on their trading plans, experience, intuition, and current market activity. Precision and timing become increasingly important the shorter the holding period for the trade and the smaller the profit target. Once an opportunity arises, the trader must act quickly to identify the setup and pounce on the trade – seconds can make the difference between a winning and losing trade.

The trader uses an order entry interface to submit orders to the market. Many traders will also submit simultaneous orders for profit targets and stop losses to protect against adverse price moves. Depending on the trader’s goals, he or she will either wait for this position to close out before entering another one or will continue scanning the markets for additional trading opportunities.

Many traders also look for late-morning reversal opportunities. Since trading volume and volatility diminish as midday approaches, most traders will hope that any positions will reach their profit targets before lunch. Otherwise, the next couple hours can be rather uneventful (and boring) as the big money is out to lunch and the markets slow down.

Second Wind

Once the institutional traders are back from lunch and meetings, the markets pick up and volume and price movement once again come to life. Traders take advantage of this second wind, looking for additional trading opportunities before markets close at 4 p.m. ET. Any positions entered during the morning and taken now will have to be closed before the end of the day, so traders are keen to get into trades as soon as possible to reach a profit target before the session’s end.

Traders continue to monitor their open positions and look for any more opportunities. Because day traders do not hold their positions overnight, many set a time limit past which they will not open any additional positions (e.g., 3:30 p.m.). This helps ensure that they will have enough time to make a profit before the markets close.

As 4 p.m. approaches, the trader closes all open positions and cancels any unfilled orders. This is an important step since open orders can get filled without the trader realizing it, resulting in potential losses. The trader will close the day with a profit, at breakeven or at a loss. Either way, it’s just another day at the office, and seasoned traders know to neither celebrate large wins nor cry about losses. To traders, it’s what happens over time – in terms of months and years – that matters.

Outside of a day trader’s market day, a lot of time is spent on research – learning about the markets, experimenting with technical indicators and honing their order entry skills using simulated trading platforms.

Post-Market

After the markets close, traders finish up the day by reviewing their trades, making note of what went well and what could have been done better. Many discretionary traders use a trading journal – a written log of all trades including ticker symbol, setup (why the trade was taken), entry price, exit price, number of shares, and any notes about the trade or what was going on in the market that may have affected the trade.

If organized and consistently used, a trading journal can provide vital information to a trader looking to improve his or her plan and performance. Many traders will return to a financial news network to get a recap of the day and start making plans for the next trading session.

The Bottom Line

Day trading has many advantages. You can be your own boss, set your own schedule, work from home and achieve unlimited profits. While we often hear about these perks, it’s important to realize that day trading is hard work, and you could put in a 40-hour work week and end up with no “paycheck.”

Day traders spend much of their days scanning the markets for trading opportunities and monitoring open positions, and many of their evenings researching and improving their trading plans. Because trading can be a solitary endeavor, some traders choose to participate in trading “chat rooms” for social and/or educational purposes.

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