What is an Investment Trader? Definition, Types and Benefits
In a stock investment instrument, it is not only the investors who pursue profits and create the right strategy to get the maximum possible investment profit. There is one more important figure who makes stock investment more attractive and certainly helps many investors to get more profit from playing stocks.
That figure is a Trader. For those who often struggle with things that smell like investment, you must be familiar with this one figure. Just like the title Investor, Trader is one of the professions that is currently trending. More and more new traders appear thanks to technological advances that support them.
Confused about finding the best credit card? Cermati has a solution!
Understanding Trader in Investment
Trader is a term for those who buy and sell an investment instrument or trade in various investment instruments. The principle of trading here is to buy when the price drops, then sell when the price increases.
The goal of trading is to pursue maximum profit in a short time with a good strategy and analysis to avoid losses when trading. In investing, if the investor focuses on the fundamentals of the product to be purchased, the Trader will focus on the sentiment and market conditions.
So, a trader is not a person who cares too much about the performance of the company’s shares to be bought, but more towards as long as the market sentiment towards the company is positive, then he will buy his shares for resale as soon as possible.
That’s because, compared to investors, the transactions made by traders are more short-term in nature with a much greater frequency.
Traders who are already very proficient can enter all types of markets, whether forex, stocks, commodities or futures markets. George Soros, founder of Quantum Funds, is an example of a world-class trader who has become a successful trader.
Current Types of Investment Trading
Traders in stock investment are well known, but did you know that the Trader profession itself is found in almost many other types of investments. Here are the types of investment traders currently available:
1. Forex trading
In forex, trading is trading foreign currencies by taking advantage of currency exchange rates that fluctuate over a certain period of time. However, the way it works is different from exchanging money at a money changer.
Short-term forex trading can be done online by depositing a certain amount of money first. Almost the same as short-term stock trading, but the object being traded is not the issuer’s stock, but foreign currency.
An example like this, for example buying US dollars worth US $ 10 when the price is Rp. 14,000 in the morning. Then in the afternoon the price of the dollar against the rupiah rose to Rp. 14,100. So, we can get a profit difference of Rp. 100 for each dollar bill sold.
2. Stock trading
Stock trading is buying and selling stocks in the short term. Both offline and online via the stock application. The way stock trading works is very simple. That is buying stocks when they go down, then selling them back when they go up.
That way, stock traders can get capital gains or profits from selling shares when the price rises. This method is not much different from other simple trading systems.
For example, you buy chili for Rp. 40,000 on Monday. The next day you resell the chili when the price rises to Rp. 60 thousand. This means that there is a profit (margin) of Rp. 20 thousand.
3. Binary Trading
Binary Options or in Indonesian known as binary options are a form of online trading instrument where traders predict or guess that the price of an asset will rise or fall within a certain period of time.
Binary short-term trading systems are generally applied to horse racing and soccer gambling transactions, but binary trading itself is not gambling, only the system is widely applied to many types of gambling.
The way it works is where we risk money to set certain targets in the binary system. If the target is met, we will get double profits. On the other hand, if you don’t reach your target, your money will fly away.
4. Trading Gold
Gold Trading/Trading gold is trading gold online in the forex market without involving the physical movement of gold assets. This is an alternative way to take advantage of the ups and downs of gold prices.
The concept of Gold Trading is actually similar to forex trading, where the role of gold as a currency in the forex market is traded with the XAU symbol.
Usually gold is paired with the US Dollar currency, namely in the form of a XAU/USD pair, because the dollar price can be influenced by several factors such as inflation, central bank monetary policy, and the level of the United States economy.
So, when the US Dollar is expected to decline, most investors will take long positions on XAU/USD, meaning buy XAU and sell USD.
5. Bitcoin Trading
Bitcoin trading is one way to profit from one of these cryptocurrencies. The concept of bitcoin trading is to profit from the difference between the selling price and the buying price. Buy at a lower price and sell at a higher price.
The object of this short-term trade is Bitcoin itself which can be purchased with rupiah currency from IDR 1,500 to get 0.00001 bitcoin. By looking at the current potential of bitcoin, it can be said, the possibility of profits ranging from tens to hundreds of millions of rupiah can be very large.
Benefits of Being an Investment Trader
Just like investing, Traders have their own way of earning profits. Now for those who are interested in trying this contemporary profession, here are some of the advantages that can be obtained by becoming a trader:
1. Can Participate Even though Limited Capital
You can still be a trader even though your capital is limited. For example, in forex trading there is such a thing as a margin and leverage system where the existence of this system allows the broker to lend a certain amount of funds in proportion to the guaranteed funds from the trader.
So, even if your capital is limited, you can start trading thanks to the system. And because it resembles trading activity, trading is suitable for those of you who want to earn additional income from limited capital with a short time span.
2. Can be done from anywhere
Due to the advancement of internet technology today and the many trading applications for smartphones, it makes trading activities easier and more flexible. Only armed with gadgets such as laptops, tablets or mobile phones and an internet connection, you can trade at home, cafes, offices and even on the MRT.
3. There is an Auto Trading feature that makes trading easier
In online trading applications, the Auto Trading feature helps you to buy and sell according to orders that are applied automatically. So you no longer need to bother monitoring the price movements of trading instruments from time to time. Just set the buy and sell prices according to your trading plan and let the feature work automatically.
4. Low Cost
Because everything is completely online, trading activities are not only flexible but also don’t cost a lot. In addition, as a trader, you have direct control over buying and selling transactions.
So you no longer need to pay for brokerage services. The fees charged by securities are also relatively lower than conducting transactions with brokerage services.
5. Could be a side job
If you don’t intend to make a Trader a full time job, you can trade as a side job. You just use your free time productively by working part time as a trader.
Don’t worry, the forex and commodity markets are active 24 hours a day. So, you just have to manage the time between working in the office and trading.
6. A good source of additional income
If you already understand well the ins and outs of trading, you can easily earn money in no time by becoming a Trader. Make sure you have studied and understood the details of each instrument and choose which one suits your current financial condition to avoid big risks.
Understand Well because Remember Everything Has a Risk!
Whether you are an investor or a trader, the risk in an investment instrument is unavoidable. There is nothing we can do to eliminate risk in investment instruments except to minimize it. And the most effective way to minimize risk is to understand well the chosen investment instrument. Keep learning, asking questions and trying to get bigger profits.