“Choose a job you love and you'll never have to work a day in your life” Confucius.”
The trade of trader, which was until very recently exclusively reserved for the most brilliant students from prestigious training courses such as polytechnic, central, or HEC, is now accessible to everyone for the following reasons:
- The launch of CFDs.
- The development of online brokerages.
The purpose of this article is to introduce you to the different training courses available to you if you want to become a trader in 2022, with or without a diploma.
Before Jumping into the article i suggest you read my last article about Becoming a Private Home Trader with few useful tips.
What you will learn by reading this article:
- What is a Trader?
- The Different Trader Profiles.
- Training to Become a Trader by Following Academic Paths.
- How to Become a Trader without a Diploma
What is a Trader?
Adored or hated, the trader rarely leaves people indifferent, because this profession is often associated with prestige and social and financial success.
The trader is indeed often associated in the collective imagination, with the supercharged golden boy, who earns millions of euros, sniffs coke rails, and assiduously frequents prostitutes. The media or many films like The Wolf of Wall on Wall Street have fueled mistaken beliefs about traders.
The trader is a profession that fascinates and fuels heated debates when stock market crashes occur because he then becomes the perfect scapegoat, someone who is driven only by greed and stripped of all moral values.
But the reality is quite different ……
There are several categories of traders with very specific skills, knowing that the most well-known trader, in the eyes of the general public, is an employee or an independent private investor, who buys and sells financial assets, to achieve only profits. Values rise or fall, and he works on behalf of his clients or the financial institution for which he works, where applicable on his account.
Unlike the fund manager who buys securities with a long-term horizon, the trader is a speculator who makes bullish or bearish bets on stocks, bonds, currencies, commodities, cryptocurrencies, rates or derivatives such as warrants, turbos, options, CFDs depending on their specialization and trading style (scalping, day trader or swing trader).
The scalper is a speculator who compulsively, if not frantically, buys and sells various securities, derivatives, rates, commodities, or cryptocurrencies.
The scalper on the foreign exchange or currency market, also called Forex, only wants to scavenge a few pips or points, for buying or selling, by keeping his positions for a few seconds or only a few minutes.
Scalping is a trading style reserved for the most seasoned traders because it is a very stressful and very tiring activity that requires maximum concentration and composure at all times when the trader is working with effects very lever important. It is not uncommon to see traders with trading volumes that can reach up to 500 orders per day.
The day trader is a speculator who buys or sells various financial assets with a lower transaction volume than the scalper and whose main common point is to close all his positions before the markets close.
The swing trader is a market operator who works with different financial instruments (stocks, bonds, rates, commodities, forex) and whose objective is to surf a new bullish or bearish wave while maintaining his positions over several days, see weeks or months depending on the trend of the financial asset.
The scalper, day trader, or swing trader works only with stock charts, which represent the price of the financial instrument, and mostly uses technical and chart analysis to make buy or sell decisions.
20th-Century Trader Versus 21st-Century Trader
When employed, the trader works in a corporate and investment bank, a hedge fund (non-listed investment fund), a broker who offers investment services, an insurance company, or on behalf of a multinational listed on the stock exchange such as Total or EDF who need traders to carry out hedging operations on the foreign exchange market (FOREX).
The twentieth-century trader who vociferated on the floors no longer exists because of advances in information technology, not to mention the development of information and communication technologies with the rise of the Internet.
The Brongniart Palace, which was founded in 1808 at the request of Napoleon I, was the seat of the Paris Stock Exchange from 1826 until 1998.
The development of information technology spelled the end of quotations and auction transactions which ceased in 1987 to be replaced by electronic exchanges.
Discretionary trading was the unique and only form of trading, before the arrival of microcomputers and the massive development of trading algorithms, which gave birth to systematic trading, where all trading operations are fully automated with speeds of transactions calculated in microseconds!
We are thus witnessing a paradigm shift, with the new era of systemic trading in the 21st century, as traders are now replaced by trading algorithms and engineers whose main task is to ensure that the algorithms work properly.
Corporate and investment bank Goldman Sachs, which employed 600 equity traders in 2000, drastically reduced its payroll, as it only employed 2 equity traders in 2017.
The 598 traders who were let go were replaced by 200 IT engineers.
The Different Trader Profiles
Below are the main profiles of traders with specific skills:
Owner traders who speculate with corporate and investment bank equity are the most well-known traders in the eyes of the general public. The job is very profitable when the objectives are achieved with bonuses that can reach several million dollars.
Arbitrageurs traders unlike speculator traders do not take risks in the financial markets, because their job is to buy a share that is listed on several stock exchanges at the lowest price, to resell the title at the highest, according to offers offered by other stock exchanges.
Market makers are traders who quote unregulated derivatives such as warrants, turbos, or CFDs. They are remunerated (variable part) according to the margin generated.
Traders who carry out hedging transactions execute the orders of their clients who wish to protect themselves from a fall in prices within the framework of their professional activities as is the case with farmers or wheat traders for example who buy wheat futures contracts to protect themselves from a drop in the price of their crops.
Sales traders are salespeople whose objectives are as follows:
- Open as many customers as possible.
- Increase the transaction volumes of corporate and investment banking, hedge fund, or stock brokerage clients.
Investment traders within a corporate and investment bank have the role of participating in the IPOs of companies. They also participate in bond issues.
The traders of the Republic are civil servants who work at the Ministry of the Economy and Finance, within the France Trésor agency, which manages the debt service and whose mission is to borrow money at the best price, from institutional investors to finance the operating expenses of the state.
The Pompidou Giscard law of January 2, 1974, was a turning point in the history of the Republic because it prohibited the French government from borrowing money from the Banque de France, and thus forced the state to seek funding from French and foreign commercial banks, which charge interest rates based on the country's credit rating and the rate set by central banks.
Article 123 of the Lisbon Treaty (which cancels and replaces the old article of the Maastricht Treaty) is unequivocal, as it clearly states the prohibition for all member states to borrow money from their bank. central.
They are thus forced to borrow liquidity from the following major international commercial banks:
- Goldman Sachs
- Citigroup
- Bank of America
- JP Morgan
- UBS
- BNP Paribas
- Societe Generale
- Natixis
- Agricultural credit
- Deutsche Bank
#The typical day of a salaried trader
Below is a typical day for an owner trader working in a corporate and investment bank trading room:
From 7:00 a.m. to 9:00 a.m.
The days of an owner trader in a corporate and investment bank (BFI) are very long and begin at 7:00 a.m. with the evolution of the Asian market (the SSE Composite Index, the Nikkei 225) and the analysis of the closing of the American stock markets (S&P 500, Dow Jones, Nasdaq) which closed at 10 p.m. the day before.
The trader will also consult the macroeconomic agenda, the calendar for the publication of company results, and the financial and economic news of the day.
He will then analyze the market trend thanks to the technical / chartist analysis and build a trading plan to finally prepare his 1st orders for the opening of the main European markets (CAC 40, DAX, the FTSE 100, the EURO STOXX 50).
9:00 a.m. to 5:30 p.m.
A trader's hectic day begins at 9:00 a.m. with the opening of the European stock exchanges and ends at 5:30 p.m. knowing that us exchanges open at 3:30 p.m. with a pre-opening at 3:00 p.m.
From 5:30 p.m. to 10:00 p.m.
At the close of European markets at 5.30 p.m., the trader takes stock of his transactions.
He monitors the evolution of the US markets, analyzes the impact of macroeconomic statistics on the index trend, and will keep an eye on how institutional investors are reacting following the traditional publication of corporate results.
Training Courses to Become a Trader in 2021
There are several training courses to become a trader in 2021 as you will see below.
The Academic Path
The trader profiles that are retained by the CIBs (financing and investment banks) and financial institutions are quite specific because they favor candidates with mathematical profiles who are graduates with specializations in finance markets, such institutions like The Polytechnic School, The Central School, etc.
The trader profiles that are retained by the CIBs (financing and investment banks) and financial institutions are quite specific because they favor candidates with mathematical profiles who are graduates with specializations in finance markets, such institutions like The Polytechnic School, The Central School, etc.
If you are brilliant in mathematics, it will be necessary to orient yourself towards scientific training, to obtain a scientific baccalaureate S with honors at least, then to do the preparatory classes in math sup, math spé and then prepare for the competitive examinations of the engineering schools.
Contrary to what you can read on the Internet, you will never become a trader in a prestigious financial institution, (with a few exceptions which can be counted on the finger of one hand), if you have not followed a high school engineer or a business school such as HEC.
The classic third cycles (DESS, MASTER) offered by universities or second-tier business schools, make it possible to integrate administrative positions at most in the back office and middle office of the trading rooms.
Applicants should be bilingual in English knowing that fluency in other foreign languages is highly appreciated if you wish to pursue a career in foreign countries.
Below are the qualities you are looking for if you want to become a profitable trader:
- Discipline.
- Concentration.
- Stress resistance.
- Humility.
- Responsiveness.
- A mind of steel.
In terms of development prospects, a trader can become in the medium term responsible for a small team of a "desk" of traders and in the long term in charge of a trading room.
The Main Financial Cities to Work as a Trader
- Boston, Massachusetts, USA
- Chicago, Illinois, USA
- Dubai, United Arab Emirate
- Frankfurt, Germany
- Hong Kong, China
- London, England
- New York, New York, USA
- San Francisco, California, USA
- Tokyo, Japan
- Zurich, Switzerland
The salary of a novice trader consists of a fixed and a variable remuneration according to the result and the performances which have been fixed by the manager.
The bonuses of the New York traders on Wall Street peaked in 2017 with $ 24.5 billion collected according to Thomas DiNapoli, Controller of the State of New York. The sums are enough to make you dizzy ......!
The corporate and investment bank, Deutsche Bank, however in difficulty, is not left out with the payment of 2 billion euros in bonuses in 2017.
What are the advantages and disadvantages of being an employee trader of a bank or a financial institution?
Advantages :
✔ The status of the employee.
✔ The bonuses are very high and unlimited depending on the performance achieved by the traders.
✔ The status of the employee.
✔ The bonuses are very high and unlimited depending on the performance achieved by the traders.
The inconveniences :
✔ The working days are very long from 7 a.m. until sometimes midnight.
✔ Stress is very important.
✔ The competition is very tough between traders.
✔ The prospects for development remain limited.
✔ The working days are very long from 7 a.m. until sometimes midnight.
✔ Stress is very important.
✔ The competition is very tough between traders.
✔ The prospects for development remain limited.
The profession of trader is threatened by the development of artificial intelligence and systematic trading as we could see with the abolished positions at Goldman Sachs.
How to Become a Profitable Trader without a Degree?
Fortunately, there are alternatives, if you want to become a trader, without having to follow the training offered in major engineering schools.
If you did not graduate from a major engineering or business school or if you simply do not have a diploma, today it is possible to become a freelance trader from your home for the following reasons:
- The launch of CFDs.
- Online trading.
- Online brokers.
- Online trading training.
Trading, which was once the prerogative of professionals, is now widely accessible to the general public, since November 1, 2007, following the European Mifid directive (Market in Financial Instruments Directive), which democratized access to trading. by authorizing, among other things, the launch of CFDs.
CFDs are unregulated financial instruments that allow retail investors to trade in various markets that were once reserved only for professionals such as stock indices (CAC 40, DAX, S&P 500, DOW JONES, NASDAQ, etc.), the currency market or forex, commodities, rates but also cryptocurrencies and stocks.
CFDs are derivative products that are very successful because they allow individuals to speculate up or down in financial markets around the world with a low initial investment.
It is possible to learn the basics of trading for free if you are new to the following training course to learn to trade for free. You can also buy books, ebooks or follow private training in person or remotely. It is possible to become a profitable freelance trader without graduating from a major engineering school by following the best online trading training.
Below are the Main Advantages if You Want to Become an Independent Trader.
- The ability to earn a comfortable second income and thereby increase your net worth by spending just 30 minutes a day.
- The freedom to work where you want if you want to make a living from trading.
Below are the Main Drawbacks if You Want to Become a Freelance Trader.
- Isolation if you want to become a trader to earn a living from trading.
- Addiction to trading if you only scalp the financial markets.
- The delicate management of emotions if you are new to trading.
Do you have to be a genius to become a trader or do you just have to take the training?
Does success in trading require innate qualities or is it possible to learn to trade, is this a question that has often been asked by many professionals?
Does success in trading require innate qualities or is it possible to learn to trade, is this a question that has often been asked by many professionals?
It pitted the brilliant commodities trader Richard Denis against his partner William Eckhardt.
According to Richard Denis, you don't have to have any gifts or innate qualities to be successful in trading, because you just have to learn and follow rules to win on the stock market.
His partner William Eckhardt took the opposite view, arguing that it takes talent to become a profitable trader. “We are going to breed traders like we do turtle breeding in Singapore”. Richard Dennis.
It is in his terms that Richard Denis decided to launch the crazy bet of recruiting ordinary people, via classified ads in the newspapers, to teach them in two weeks the rules of trading. The successful applicants formed a group that had been called the “turtles” and achieved the feat of earning $ 175 million over 5 years with an average performance of 80% per year.
Curtis M. Faith who was the youngest and brightest trader of the 19-year-old group wrote a book “The Strategy of the Turtles” which describes precisely the trading strategies that had been employed by the traders.
Numerous studies and research in psychology have shown that expertise in a field does not come from innate qualities but only through work and learning.
According to Tom Baldwin, a legendary self-dictating trader who successfully speculated our treasury bonds, T bonds, on the Chicago floor, there is no need to graduate from a major engineering school to become profitable in a purse because according to him:
The smarter you are, the worse off you will be. The more you know, the worse it will be for you.
The greatest traders in the history of the stock market are not geniuses in mathematics who graduated from engineering schools and employees in financial institutions but simply ordinary self-taught people who started with very little capital.
The Greatest Independent Traders of the 20th and 21st Century
Jesse Livermore who came from a very modest background is a legend on Wall Street because he amassed a fortune that had reached nearly $ 100 Million starting from zero.
He learned the rules of speculation when he was committed. He was a “killer” in the art of speculation and is considered to this day by his peers as the most brilliant speculator.
Jesse Livermore was first a day trader before becoming a successful swing equity trader. He used the “break out” as a trading system and did not hesitate to strengthen his positions up or down when the market proved him right.
Nicolas Darvas was a professional dancer who successfully speculated in the equity markets, amassing a fortune of $ 2 million in 1960 in just 18 months. Time Magazine paid tribute to him by offering him his cover.
He was also a talented swing trader who only speculated on the upside of New York Stock Exchange stocks. Like Jesse Livermore, Nicolas Darvas was a trend follower who also used breakout as a trading system to trade stocks.
He only speculated on the stock market when the market was bullish, not hesitating to stay away from the stock market for several months when the conditions were not met to initiate a trade.
He also pyramided his positions like Jesse Livermore, to make even more money, when the market confirmed his trading plan.
Tom Baldwin is a living legend on the Chicago Board of Trade (CBOT) floor as he was the only independent trader to create movement in the US T Bond market, according to the Wall Street Journal.
After working as a “meatpacker” in Ohio, he decided to quit his job, on the advice of a friend, to start a career as a freelance trader on the CBOT floor in the absence of training. financial markets.
He started in 1982 with a capital of only $ 25,000 to become a millionaire in the space of 1 year!
Dan Zanger is another US proprietary trader who holds the world record for equity returns because he achieved the feat of turning an initial capital of $ 11,000 into $ 18 million in just 18 months or a return of 164,000. %!
Dan Zanger is also a swing equity trader like Jesse Livermore and Nicolas Darvas and uses the same “break out” trading system.
Sylvain Duport is a French swing trader whose performances make you dizzy ……. Because he distinguished himself in 2004, during a trading competition called “Capital trophies” (sponsored by the broker Cortal Consors) and in which he recorded a performance of 500% by finishing 1st in the competition in just 1 month!
But he did not stop there, far from it! He repeated the feat with a performance of 3000% on his stock market portfolio to finish at 8000% 1 year later!