What is a day in the life of a trader like?
Ever wondered what a day in the life of a trader looks like? We followed three experienced traders to get insights into what it takes to be successful. Watch the videos then share your tips with #lifeofatrader on social media.
We followed three traders over the course of a day to find out what it takes to be the best. By watching the videos on this page, you can learn about daily check points, trading styles that work, and how analysis helps traders to make better decisions. The videos will also be useful if you want to combine trading with your other daily activities because all three of the traders we followed also work as analysts at DailyFX, making them ideal role models.
What do traders do?
Traders buy and sell financial instruments with the aim of making a profit. They can choose between cash instruments such as shares, forex or bonds, or derivatives such as CFDs, futures or options. With cash instruments, the aim is to buy an asset at a low price and sell it at a higher price. With derivatives, on the other hand, traders are speculating on the price of an asset – without taking ownership of it – so it is possible to make a profit from both rising and falling markets.
All trading carries risk, so no matter what instrument is being traded, who’s trading it or where the trade takes place, balancing potential profit against risk is extremely important. Risk management includes having a trading plan in place, applying appropriate stops and limits, and never risking too much capital.
There are different trading styles for traders to choose from. It all depends on their personal preference, available capital and risk appetite. The four main trading styles are:
|Weeks, months or years
|Days to weeks
|Very short term
|Seconds to minutes
How do traders use fundamental analysis?
Traders use fundamental analysis to assess various internal and external factors and decide how much they think an asset is worth. They might examine recent earnings reports, how a sector is performing, and the health of the economy as a whole. If they believe the current market price of the asset is undervalued after conducting their analysis, then they’ll buy. If it is overvalued, they’ll sell.
The next video follows long-term trader Christopher Vecchio, a US trader who focuses on European markets. Christopher uses a lot of his time to do research and read the news – he emphasises learning as much as you can. ‘If it’s new techniques or new points of view, there is always something that you could potentially take into your trading strategy and mindset to improve your process’, he says. He uses fundamentals as the foundation for his analysis, and technicals for timing entry and exit points in the market. His top tips for trading are to set your emotions and ego aside – ‘you don’t want to be right, you just want to make money’.
Watch Christopher’s video to learn about the importance of having a system in place
How do traders use technical analysis?
Traders use technical analysis to study price movements in the market; they do this using charts and technical indicators. Technical analysis can help a trader to find patterns that would give an insight into where the market is headed next, and to trade accordingly. A successful technical trader might use a few different indicators to confirm the signals they have spotted.
The video below follows Michael Boutros, a short-term trader who focuses heavily on technical analysis and price action. Michael places a lot of emphasis on finding your trading style and stripping emotion out of your decision-making. He forewarns against using a single strategy or technique for a long time. ‘Never stop learning’, he says, 'you’re constantly adapting'.
Watch Michael’s video for more insight into finding your trading style
What do traders do before the markets open?
Before the markets open, traders often revise their plan to make sure they remain disciplined and unemotional during the trading day. Most traders wake up very early to start their planning, which can include:
- Rehearsing strategies
- Checking account balances
- Reviewing an economic calendar
- Reading news and market updates
- Checking overnight positions and alerts
- Finding new trades
- Placing orders
All the traders we interviewed set time aside each morning to rake through news sites and apps, read the paper and catch up on market news. This is a crucial part of trading, as it enables you to prepare yourself mentally and come up with a ‘game plan’ for the day ahead.
The video below follows Renee Mu – an Asian market trader who loves the mathematical and psychological elements of trading. Renee starts her day by catching up on market news, then sets out small amounts of time during the day to look at charts and work on her analysis. She uses a combination of fundamental and technical analysis to study the markets and plan her trades. Fundamental analysis helps her to decide on a trend, then she uses a few simple technical indicators to further develop her trading strategy. Her trading plan is her most important weapon, saying it’s ‘a solution to deal with human weak points’ such as arrogance and a lack of scrutiny.
Watch Renee’s video to learn about balancing your trading schedule
Day in the life of a trader: early trading
Early trading happens when the stock markets open. This is when there is often more volatility and liquidity. However, what traders do with this time varies – some traders will open new positions while others will continue planning.
Renee, for example, uses this time to catch up on what the charts are doing, whereas Christopher – who focuses on European markets – uses the early hours to do a lot of reading, separating the wheat from the chaff and deciding what might affect his trading plan. Michael has alerts set up to monitor price action, so any early trading depends on whether he is alerted to take action.
Day in the life of a trader: after lunch
What a trader does after lunch depends on their trading style. Renee works on her analysis and trading plan – by this time, she already has some trading ideas that she can incorporate into her plan.
Christopher, who may be home by 2pm, still has to remain cognisant of the US markets closing as significant forex price movements can happen during this time. Michael will do whatever the market dictates him to do. If there is no price action that prompts him, he won’t do anything.
What do traders do post-market?
When the market closes for the day, traders can review their trades and recap market behaviours. It’s important to review the market volatility, number of trades, how many were successful or unsuccessful, and what the profit or loss was per trade (in points or pips).
Christopher emphasises that you should always be aware of what’s happening in the markets, even after market hours. Renee says that ‘after you close a trade, that’s not the end. You want to review what you did right and what you did wrong, and then improve it in your future trading’.
Even out-of-market hours, traders must have awareness of what is happening in their chosen market. When Michael gets home, he gets right back into things. He has a setup that enables him to keep up to date with news and continue monitoring charts.
Because there are markets to trade all over the world, stock market hours differ. This means some traders speculate on the markets at night. The advantage is that they can trade these markets real time and react quickly to any news. Renee’s business requires her to work at night, so night trading makes sense for her.
Some markets, including indices, can be traded on the weekend. Therefore, traders do sometimes trade on a Saturday and Sunday. Renee, who focuses on Asian markets, may watch the Hong Kong HS50 on her weekends, while Michael has been known to enjoy a break from trading from time to time. Weekends are also a good time to review the week’s trades. If there are any mistakes to improve on, you can practise on a demo account to correct them.
A day in the life of a trader in summary
We’ve summarised a few key points on the day in the life of a trader below:
- There are four main trading styles: position trading, day trading, swing trading and scalping
- Traders use fundamental analysis to decide how much they think an asset is worth
- Traders use technical analysis to study price movements in the market
- Before the markets open, traders often plan their day to make sure they remain disciplined and unemotional during the trading day
- Early trading (when the stock markets open) offers high volatility and liquidity
- What a trader does after lunch depends on their trading style
- When the market closes for the day, traders review trades and recap market behaviours
- Because there are markets to trade all over the world some traders resort to night trading
- Even during out-of-market hours, traders must have awareness of what is happening in their chosen market
- Some markets are open on the weekend to facilitate trading on a Saturday and Sunday
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