How to become a trader? Our complete guide to achieve your objectives

Top Trading Sites in France

number 00e9ro 1eToro logo★★★★★★★★See Site (*)
number 00e9ro 2IqOption logo★★★★★★See Site
number 00e9ro 3BDSwiss logo★★★★★★See Site
number 00e9ro 4XTB logo★★★★★See Site
number 00e9ro 5AvaTrade logo★★★★See Site

The profession of trader maintains an aura and a part of mystery that is very much a fantasy. Traders are sometimes perceived as golden boys, mathematical geniuses or shameless characters, yet it is impossible to draw generalities or draw a typical portrait of the trader.

Indeed, there are dozens of different types of traders with different backgrounds and personalities often in the opposite direction. If you ask active traders which channel their guidance counsellor or ONISEP recommended to them, they are unlikely to answer you that it is trading.

What is a trader?

Regardless of his speciality, a trader is above all a trader, able to carry out his transactions at prices that allow him to generate a margin. The first traders are historically the agricultural owners marketing their current or future crops. Depending on the complexity of the products, the profiles vary enormously, which is why there is no such thing as a trader’s profile. The sales side (sales) and the speed of thinking and execution will take precedence over the simplest products, but for complex derivatives, it is the analytical and mathematical thinking skills that will be essential. On proprietary trading, anticipation and speculation associated with risk control will make the difference.

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Equity trader

Equity traders are specialized in shares of publicly traded companies. Equity traders are found in investment funds, brokers and banks. They are advised by analysts, both for fundamental analysis (that of a company’s health) and for technical analysis (that of stock prices). Working together with the sellers, they must manage their clients’ positions, execute their orders or monitor borrowings in the case of short sales of securities.
Some equity traders have a market-making role, also called market-maker, and thus offer a purchase and sale price on the securities in order to generate a margin (a spread). This requires a very rapid ability to adapt because the volatility on equities can vary enormously in a very short period of time.

the wallstreet wolf

As equity trading has been highly automated and computerized since the 1990s, computer and programming skills are a significant asset. Of course, many individuals also devote more or less time to the practice of equity trading, some of them in a quasi-professional occupation.

If you want to start trading equities in simple form such as protected CFDs (up or down), we recommend one of the best French eToro brokers who offers a free demo.

Rate and Forex Trader

While equity traders are found everywhere, those on interest rates and forex are more concentrated in banks and a few very large hedge funds. The interest rate and foreign exchange markets are highly correlated because a central bank’s decision to raise its key interest rates will have an impact on both worlds.

As with equities, there is a range of profiles between short-term and spot traders who play movements of a few hundredths of a hundredth of a euro (pips) on the price of a currency and long-term traders who take more credit risk on their counterparties.

In fact, on credit, bond traders have the ability to analyze a company’s balance sheets and income statements to assess their creditworthiness. They will then be able to arbitrate a company’s debt or subscribe to derivatives such as credit default swaps to speculate on the company’s bankruptcy or good health.

If you want to start currency trading we recommend the 3 brokers below:

  1. Etoro (see our review on E toro)
  2. IQ Option (see our review on IQ Option)
  3. BDSwiss (see our review)

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Trader in structured products

Unlike short-term traders known for their reactivity and sales-traders with more commercial arguments, traders in structured products play on their mathematical skills and risk anticipation. Indeed, they market complex derivatives products that are complicated to replicate with standard equities and derivatives. They must therefore have both an engineering profile capable of building original concepts that meet their customers’ needs and solid mathematical knowledge to properly assess the risks they take if the market situation turns sour.

What are the prospects for traders?

Trader drawing and 6 screensTrading is a profession that probably reached its peak in the 1980s, the era of golden boys. In banks and investment funds, mergers and acquisitions financed with rotten loans have enriched a whole generation of investment bankers and traders in a climate that blends cocaine, insider trading and blondes. Since then, the profession has become more relaxed, bonuses are no longer as huge and salaries, although very comfortable, have decreased considerably.

Wages and salaries

Trading salaries have the specificity of being driven mainly by a very comfortable fixed portion and a disproportionate variable portion that cannot be found anywhere else. A new trader will earn between 60,000 and 80,000 euros per year on a fixed basis and a bonus of between six months and one year’s salary. The progression is then dazzling since, if he performs well, his compensation will double on average every three years. Before the subprime financial crisis, the best traders could receive a significant share of the profits they generated, receiving cheques amounting to millions of dollars.
From now on, a larger proportion of the bonus is spread over time in order not to encourage excessive short-term risk taking. Nevertheless, despite a relative decline in these benefits, salaries and trading compensation growth remain well above what other industries can offer, with the possible exception of a few giants in Silicon Valley for very specific IT positions.
These figures have to be balanced against stressful living conditions and lack of job security. It is difficult to reconcile a career as a bank trader with a family life, even if some people succeed, because trading involves constant attention and significant emotional jumps.

Become a trader

For example, some funds do not allow for error by firing their employees after the 10% loss. Overall, a trading career is therefore very competitive and reserved for well tempered characters.
Independent traders operating from their own equity receive most of the income from their activities, but they also bear all the risks and costs. They can set up a company or operate on a private basis depending on the products they process, any services they can provide to other investors and the most attractive tax regime.

Contrary to what some aggressive advertisements announce, you do not become a trader by spending a few minutes a day placing orders, this profession requires rigour and a lot of research in order to become and remain profitable.

Reconversion

The average life of a trader in a highly exposed position in investment banking is less than ten years. Conversion is therefore an integral part of a trader’s career and the progression is much less linear than in other industries, fluctuating according to the economic cycles.

The most frequent path is the transition to the buy side, i.e. portfolio management in an investment fund or private bank. As traders have a very good knowledge of the markets, they adapt quickly to this change thanks to their recognized technical qualities.
Traders have the opportunity to accumulate wealth and capital during their first years of career, which opens up unique opportunities for them in terms of business creation, for example.

trader image fun become trader

There are traders who have bought vineyards in Bordeaux, set up a restaurant on a Thai beach or taken over small local businesses to provide them with their financial and management expertise.
Even within banks, upward movements in the hierarchy are in the minority and very competitive, there are very few golden cupboards for former traders and this can be understood in view of the salary they are asking for. As a result, there are more and more people switching to risk analysis and management.

Experienced traders are best able to identify the risks associated with positions in complex structured products. In this case, they will have to make a concession on their remuneration, but they will find a balance between their private and professional lives.

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What studies are required to become a trader?

As mentioned above, there are several types of traders going from the fish seller to the mathematician almost locked in his bubble. There are thus a multitude of trading profiles according to the specific needs of desks or companies employing traders.

Engineering school

The royal path to becoming a trader, particularly in France, remains that of the best engineering schools after preparatory classes for the grandes écoles (CPGE). Among the schools that have trained a very large number of traders are of course the Ecole Polytechnique, the Ecole Centrale (Paris and Lyon), the Ecole des Mines, Supélec, Télécom ParisTech and the Arts et Métiers. Although this is sometimes almost inbreeding, these profiles are sought after for their rigour, work and analytical skills.
But it is not necessary to have attended a school in group A, whose recruitments are concentrated in the largest institutions capable of hiring them. If you follow the training of a school that guarantees you good employability, in IT for example, you will be able to find a job on a desk even more easily.

Even if you don’t immediately trade, you will have the opportunity to prove yourself and show what you can do to get the job of your dreams.

Business school or university

For flow trader positions and sales trader positions, business schools take the lion’s share. Unsurprisingly, HEC, ESSEC, EM Lyon, ESCP and EDHEC are at the top of the table.

Nevertheless, very international profiles, particularly with a good knowledge of emerging countries or Asian languages, stand out from the crowd. Rarer, university courses remain appreciated, especially for research positions.

What training to become a trader?

Studies are not enough: to become a trader, it is essential to train yourself. There is no shortage of content and methods, in the Internet age it has never been easier to know as much as traders without necessarily having grown up in their environment or having done the right studies.

CFA (Chartered Financial Analyst)

The CFA (Chartered Financial Analyst) is a designation that certifies your financial knowledge worldwide. Consisting of three exams every year, it takes a relatively long time to get, especially if you are already working. On the other hand, it mainly requires learning knowledge in a personal way, which is the norm in market finance anyway.

If you are rigorous and passionate, you can achieve it by continuing to work or study normally, which will attest to your ability to surpass yourself and be ambitious. The exam being in English, it will allow you to master this essential communication tool in finance, while reviewing from top to bottom the mathematical and financial knowledge that could be tested in interviews.

MBA, Masters of Business Administration

If you are more experienced and your career is not necessarily in finance, the CFA will have less chance of making a difference, then you should choose an MBA. The MBA will attest to your international profile and your ability to conduct a company’s business.

It will be very useful if you want to reorient yourself towards finance and trading. But even if you change your mind, managerial techniques and strategy courses will accelerate your career in any industry. Moreover, unlike the CFA, which is studied alone, the MBA will allow you to build an extensive network of knowledge on which you can rely in your professional development.

Personal trading portfolio

One of the first questions you will be asked in a job interview for a first position will be about your portfolio. It would seem very curious for another trader if you did not have your own portfolio of securities or derivatives. Build your portfolio in a methodological way, this will allow you to earn money with it on the one hand, and on the other hand to impress your recruiter.

Becoming a trader is therefore only a matter of will, you will succeed thanks to your strength of character and your work. It is an enriching career, both literally and figuratively, which offers many opportunities for retraining. There are many access channels and gateways for trading, the most important thing being to prove yourself to the most experienced traders to benefit from their advice and experience.

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