How to become an online trader?

The world of trading fascinates and seduces more and more people who would like to make a career in finance or simply speculate profitably on the financial markets alongside their major activity. But trading is not an activity for beginners and, before becoming an internet trader, it is necessary to acquire a solid education and some experience of the markets. In this article, we will define online trading and tell you about the different ways you can learn about it.

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How to trade online and become a trader?

Definition of an online trader

First of all, let's take a moment to clarify what is meant by the term "online trader". An online trader is first and foremost a person who places stock market orders and therefore buys and sells financial products, with the aim, of course, of making a profit. They may act on behalf of a financial institution or on their own behalf. But the term online trader actually refers to different categories of trader, depending on their profile and the markets in which they operate.

Most of today's traders are people who have studied market finance and, although the profession of trader has become much more democratic recently, it is still complicated to trade online in a truly effective way and there are more losers than winners in the market.

In order to be effective, i.e. to make more winning trades than losing ones, an online trader needs to have sound knowledge and a great deal of experience in this activity.

Remember that online trading is not an easy activity, and is even risky. So don't go into it without a solid foundation, or you risk losing a lot of money.

In conclusion, an online trader is first and foremost someone who makes buy and sell decisions on the financial markets with the aim of growing capital by taking positions on fluctuations in asset prices.


Online trading courses to become a trader

As you will have realised, becoming an online trader first and foremost requires training. Many of today's financial market traders have opted to take a training course to learn the ins and outs of the business.

These courses exist all over the world and can be taken face-to-face or online. But be careful! While some of these courses may be offered free of charge, particularly by brokers, they are usually less comprehensive and, above all, less personalised than paid courses.

While it may be tempting to follow a video training course on a finance blogger's website, you should opt for courses delivered by real investment professionals. Before starting to trade online, it is essential to understand the fundamental aspects of the markets and to master the different types of analysis.

But that's not all! Good training should also give you a complete understanding of the factors that make online traders successful and the risk factors involved. The world of finance is a complex one, requiring a solid technical and psychological grounding as well as certain personal skills.


How do you gain experience to become an online trader?

If, as we have just seen, online trading is not at all suitable for beginners, you might well ask yourself how you can gain the experience you need before becoming a trader. Fortunately, there are solutions that allow you to practise trading without putting any money down, and we're going to talk to you here about stock market simulators or demo accounts.

But before describing these learning tools, remember that it is ideally preferable to acquire theoretical knowledge first and then put it to the test in practice.

Trading simulators are software packages that can be accessed via a monthly subscription or offered by brokers to showcase their trading platform. They are unique in that they allow you to speculate on the financial markets under real market conditions, but above all with fictitious capital. This means that if you lose money, it's not your money. Of course, there is no question here of making any gains either.

The purpose of a trading simulator is above all to enable investors to test and test themselves against the markets and online trading. It is also often a good way of seeing just how complex these activities can be.

But these demo accounts also allow you to try out different strategies and analyses in order to put into practice the theoretical knowledge you have acquired through training, until you feel comfortable enough to move up a gear or realise that online trading is not for you and abandon the idea.


Online traders keep their finger on the pulse

An online trader not only has to be experienced and well-trained, he also has to keep constantly abreast of what's going on in the financial markets. He will be interested in news, economic and political announcements and all events likely to cause movements on the markets.

This market news is used to carry out what is known in the industry as fundamental analysis. Fundamental analysis complements technical analysis, which is based on the study of stock market charts.

It is not uncommon for an announcement, an earnings release or even a political decision to cause a stock, an index or a commodity to fall or rise, and some online traders have even made this their speciality.

But once again, it should not be forgotten that a good interpretation of market news requires a certain flair and experience of the effects of past events in relation to other factors such as market conditions.


Schools for becoming a professional trader

While not all online traders are professional traders, there are courses that can help you turn trading into a real profession. But with the evolution of stock market quotation systems from physical to dematerialised, these traders are primarily programmers with advanced computer programming skills.

Some of the qualifications that qualify you for a job as a professional trader include a Master's degree in Market Finance from a Grande Ecole, a Master's degree in Engineering, specialising in Quant, or a Master's degree in Finance from a top business school such as HEC or ESCP Europe, specialising in Market Finance.

It is also essential to have a good command of English if you want to work in what is, by definition, an international business.

Studying to become a trader is therefore a long and varied process. But once again, experience is also essential.


Self-employed traders

Some traders who have graduated from the schools or training courses mentioned above choose to become independent. They can become self-employed professional traders by setting up a sole proprietorship or an EIRL (Entreprise Individuelle à Responsabilité Limitée). This activity is then carried out as an unregulated liberal profession.

In addition to the taxes and duties associated with their professional status, traders must of course declare their income annually, which is taxable.

While proprietary trading is not regulated, third-party trading is subject to regulation and authorisation by the AMF (Autorité des Marchés Financiers).


Risks incurred by online traders

Now that we have reviewed all the information you need to know about becoming an online trader, here is a reminder of the risks involved. It's important to understand these risks before you take the plunge.

Success on the stock market is rare, and many online traders are disillusioned by successive failures and the loss of their capital because they did not anticipate these risks correctly. Making a profit on every trade is in reality impossible, even for the best traders in the world. These traders manage to be profitable by calculating and trying to control as best they can the profit/loss ratio of their decisions and positions.

Controlling this risk factor is commonly known as money management, and involves striking the right balance between risk-taking and capital preservation. In all cases, and whatever training or path you choose to follow to become an online trader, you should never invest money that you may need.