Skillsfirst Level 3 Certificate in Introduction to Financial Trading (RQF) - UNIT 1: Principles of financial trading
Skillsfirst Level 3 Certificate in Introduction to Financial Trading (RQF) - UNIT 2: Principles of Financial Planning and Cash Flow in Financial Trading
Skillsfirst Level 3 Certificate in Introduction to Financial Trading (RQF) - UNIT 3: Understanding financial trading techniques

WHAT IS A TRADER?

Most traders buy and sell in financial markets to take advantage of price changes and in doing so they will have a different outlook and approach when trading in the market. More often than not they will trade either their own money or company money for the purpose of purely making monetary profit. Traders are therefore not always so interested in the product or the intrinsic value or purpose of the financial markets that they trade. Traders will generally be more concerned on specific strategies that they have built through experience in the markets such as:

Technical Analysis

Using charts to predict price patterns and points of entry and exit on a smaller time scale.

Market Psychology

Using the concepts of fear and greed, going against the crowd and reacting faster than investors when sentiment changes.

Supply & Demand

Keeping an eye on news and reports to have an understanding of the shift of money flow between countries or products. You may have heard this in the news or in books as the flight to quality which is one technique used to shift money to what are deemed less risky products.

Other traders

Market makers are traders who provide liquidity to certain products and they usually do so by being rewarded by exchanges or clients to do so.

In everyday trading in the financial markets it is traders who provide the liquidity for investors to trade without traders it would be fair to say that the markets would not be so appealing or accessible to investors. Traders are therefore an integral part of everyday liquid markets and their actions play an important part of the global financial system and its ability to operate. So what types of traders are there?

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