In the financial market, it is possible to operate in different ways. There are those who prefer to invest in the long term, with less hurry to obtain returns, and there are also those who prefer to focus on the short term, choosing strategies with more immediate return potential, but with greater risk.
There are even professionals specialized in these quick operations, such as day traders, for example. In these operations, the purchase and sale of the asset are made on the same dayseeking the highest possible financial return within the same trading session.
It is these professionals, specialized in making gains with the short-term volatilities of the stock exchanges, who are called traders.
The work of traders has become better known in recent years and has attracted people interested in obtaining quick returns, in discover opportunities in daily variations and willing to calculate the risks they have to accept in each operation.
A study carried out by LinkedIn in 2020 pointed this out as one of the 15 emerging professions in Brazil.
However, this is considered a high-risk activity, with a high chance of losing money. Therefore, it is indicated for those who already have knowledge and experience in the world of investments.
To help you better understand how the professional traders routine works, what is needed to become one and what is the remuneration in this activity, continue reading.
To be a trader, in itself, is to carry out transactions for the purchase and sale of assets on the Stock Exchange.
As mentioned above, in general this function is associated in negotiations with a focus on very tight deadlines.
Also called speculator, the trader behaves differently from the investor buy and holdfor example, which is known for keep your assets for a longer period of time.
The speculator is a very important figure in the financial market, since he is the one who accepts taking risks projecting some movement in the assets traded by him. To the same extent that it accepts taking these risks, it provides liquidity to the market, facilitating the circulation of capital on the Stock Exchange.
Traders can trade different financial assets and derivatives, both as individuals and as legal entities.
Many people have turned this practice into a profession and dedicated themselves to it full time. Others prefer to carry out buying and selling operations only as a complement to their main work.
O trader makes purchase and sale operations of shares and other assets analyzing graphs and factors such as the risk of the operation, macroeconomic movements, or even the mood of the financial market.
There are traders who operate linked to a company and others who are autonomoususing own capital.
There are also several short-term investment strategies. Each trader chooses his own, according to his goals and degree of risk tolerance. Check out some of the top trading strategies.
Main types of trading
A main difference between the types of trading is associated with the average interval between one operation and another. Traders usually focus on quick trades, which can last a few hours, minutes or even seconds.
But it is also possible to make long-term investments, buying an asset today and selling it only a few years from now. The choice of the date on which the operation will be settled (or closed) depends on the investment strategy adopted by each investor.
Discover now the main types of trading:
Day trade
Day trading is the most popular type of trading. In this mode, the purchase and sale of assets takes place within minutes or hoursbut the position is always finalized within the same trading session on the Exchange.
As there are a large number of operations in a single day, the cost of this type of trading is usually higherincluding brokerage fees and taxation on profits.
Scalping trade
This is a very short term type of day trade. THE time difference between the purchase and sale of the asset lasts seconds or a few minutes and is usually supported by technical analysis, which looks for trends in the behavior of assets by analyzing their price charts.
In this case, the trader seeks to make a small profit with each operation. Adding all of them, the income can be higher.
The greater the traded volume, the greater the risk-return ratio. That is, the profit may be greater, but with a greater risk of taking a loss.
Want to understand scalping strategy in more depth? Check out this blog post here.
Swing trade
In this mode, traders hold their positions for more than a day, or even weeks, trying to capture a market trend. The swing trade also seeks to be short-lived, but extends for longer than the day trade.
As the number of operations is smaller, the cost of fees ends up being reduced, compared to the two previous investment modalities
Position trade
This is a long-term trading modality. In that case, the investor can keep a position open for months, a year or even longerbelieving in the asset’s appreciation potential.
In this type of investment, the trader makes a combination of technical analysis, which analyzes asset price charts, and fundamental analysis, which looks at the company’s financial results and evaluates its business prospects.
Buy and hold trade
It is another long-term investment strategy in which investors keep their positions open for many yearsbelieving in the potential of that company to grow within its market.
While the position trade also uses technical analysis, the buy and hold trade prioritizes the fundamental analysis. In these analyses, decisions are made considering the sector, the companies’ financial results, in addition to political and macroeconomic aspects that may influence the share price over time.
How much do traders earn?
The answer is: it depends. This is a difficult question to answer precisely. This happens because The salary of this professional depends on many variablessuch as how much capital is invested, how much time is dedicated to operations and which work model is chosen, for example.
According to Salary Guide 2022 by Robert Half Consulting, the salary of a trader working for a financial institution ranges from R$9,650 to R$47,350, depending on length of experience and job level.
already the freelance traders they usually work with a daily earning goal, which varies greatly from professional to professional.
The professionals who declare themselves to be the most successful in this activity say that they can achieve monthly returns between 2% and 10%.
It is worth noting, however, that these are estimates debated among specialists and that there are no guarantees of return on these operations, which are naturally high risk.
A study published in 2020 by professors Fernando Chague and Bruno Giovannetti, from the São Paulo School of Economics of the Getúlio Vargas Foundation, showed a difficult reality for those who want to live on day trade.
From the data analysis of millions of operations, provided by Securities and Exchange Commission (CVM)they mapped that only 62 people, out of a total of more than 1.2 million Brazilians who are dedicated to the regular practice of day trading, have monthly earnings above R$ 10,000.
How to become a trader?
To become an autonomous trader, you don’t need to have a university education or specific certifications. Nonetheless, before starting to invest, it is essential to study a lot regarding the functioning of the financial market and start operating with reduced values, to avoid big losses.
The recommendation is seek serious and recognized institutions in the market, such as Anbima e B3which offer, in addition to courses, other free content, such as tutorials, guides and articles with various information regarding the variable income market.
Living as a trader is not impossible. But it is important to emphasize that this is a gradual process of evolution, with great exposure to risk.
the most important thing is determine goals and set a maximum amount that can be lost per day, to avoid major losses. In addition, dedication to the search for technical knowledge in this area is essential.
But following all, is day trading safe?
As day trading involves buying and selling assets on the same day, it is considered quite dynamic and volatile. Therefore, in order not to lose everything invested, it is essential to create strategies to limit losses and diversify assets.
This trading modality attracts many people because of the possibility of high gains, but success with day trading is not as simple as it seems.
The same study by a pair of FGV professors using CVM data showed that only 0.8% of investors who regularly engage in day trade manage to earn a daily profit greater than R$300.
The key tip is always adopt a rational attitude towards investmentsand avoid exposure to a risk profile that you are not comfortable with.
What is the minimum amount to invest in day trading?
There is no specific minimum amount to invest in day trading, although many people believe that you need to have a lot of money to start.
What determines the amount needed to carry out a day trade operation is the unit value of the asset to be traded. There are currently shares on the Exchange in the most diverse price ranges: from below R$ 1, costing cents, to over R$ 200.
please note that it is not because a stock is cheaper or more expensive that it is better or worse than the others. Hence the importance of studying the market to be able to make investment choices that make sense for your day trade strategy.
Are you starting out in the investment world? Understand how the Stock Exchange works in the video below.
Read too:
How to buy shares on the Stock Exchange? Getting Started Guide
Investing in stocks: 9 things you need to know
What are stocks and what does it mean to “invest in the stock market”?
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