What type of trader do you want to be?
Summary on how to become a trader
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There are a lot of misconceptions about online trading especially in depicting the real job of a pro trader. This time we will show what it takes to become a professional trader, what are the different paths you can experiment with.
What are investment strategies?
What type of trader do you want to be?
First, let’s make it clear what the trader is. Trader as a category, is so broad, that it is almost meaningless. Basically, you can differentiate two types of trader: retail trader and institutional trader.
Before we jump in, let’s see some example of professional traders:
Retail trader
Describing the group of retail traders is like analyzing the animals of a zoo. But in the end, there are only two types of retail traders. The ones that get fed up with losing, and the ones that carry on and eventually become successful. The bright side of the story is that from being successful, you can build your own brand and influence others like Tim Sykes (later on him). Also, retail traders can earn money from social trading – our eToro review will introduce you to this topic – or from collecting subscribers to webinars and special mentoring.
Institutional trader
Institutional trader as a category refers to the employee executing trades at the big investment bank, brokerage firm, or other companies. You will get fix salary and hopefully a hefty bonus at the end of the year.
However, this job requires that you can work under huge pressure and take the risk. You will risk your firm’s money. But guess what happens if you don’t get the market pulse for a couple of weeks or simply just lay back for a while until the next trading opportunity arrives? You are fired.
This handy table highlights the pros and cons of the retail and institutional traders.
| Saxo Bank | Fusion Markets | CMC Markets | Interactive Brokers | Capital.com | |
|---|---|---|---|---|---|
| EURUSD spread | 0.8 | 0.0 | 0.7 | 0.1 | 0.6 |
| GBPUSD spread | 1.3 | 0.2 | 0.9 | 0.3 | 1.3 |
| AUDUSD spread | 0.8 | 0.0 | 0.7 | 0.1 | 0.6 |
| EURCHF spread | 1.4 | 0.6 | 2.5 | 0.4 | 2.2 |
| EURGBP spread | 1.4 | 0.3 | 1.1 | 0.2 | 1.5 |
Seeing these major differences between institutional and retail trading you might ask rightfully? OK, which one should I be? Looking a bit deeper may help you, so let’s go ahead.
During my own trading career, I started as a retail trader and failed a couple of times. I didn’t give up and finally, I ended up on the institutional side being able to invest other people’s money under regulated circumstances. As you can see the two categories are not excluding each other, so don’t think in an either-or way.
What are investment strategies?
How to start trading?
Regardless of you want to become a retail or institutional trader, there is a path you have to go through. The first and one of the most important step is learning the basics. After you gained some knowledge, you have to test yourself in real. The last and probably not the easiest step is to trade with reasonable money.
Learn the basics
Here is some everyday trader lingo, let’s test how much you get it.
The risks surrounding the euro area growth outlook are considered to be broadly balanced. On the one hand, the current positive cyclical momentum increases the chances of a stronger than expected economic upswing. On the other hand, downside risks relating to predominantly global factors continue to exist. – Mario Draghi, ECB Press Conference
Both texts sounded Chinese? Time to learn the basics!
Every trader can reach temporary success but being profitable in the long run requires a lot of knowledge and experience. The good news is that you can quickly collect the basics from free educational sites and the brokers’ educational sites.
My top picks for free educational sites:
Both texts sounded Chinese? Time to learn the basics!
Every trader can reach temporary success but being profitable in the long run requires a lot of knowledge and experience. The good news is that you can quickly collect the basics from free educational sites and the brokers’ educational sites.
My top picks for free educational sites:
My top picks for broker’s educational sites:
Test yourself for real with demo and real account
Paper trading aka demo practice is a must, should be an intense period of learning. Generally, I recommend two things to do.
- Be foolish: trade like a real gambler, forget about money management rules, stop-loss orders, position sizing, etc. You will see how easy and quick you can lose money.
- Be serious: practice with the amount that you will deposit to your real account. Forget the $100.000 sum if you will only deposit $1000 to your live account.
Besides the demo account, trading on a real account is also very important. You will behave differently when you trade with your real money and in real nature. During your trades, there are some points you should take into account: stay informed, create your strategy, and analyze your performance.
Step-by-Step Checklist for Becoming a Professional Trader
Many aspiring traders ask the same question: how long does it take to reach a professional level? A useful perspective comes from professional trader Birger Schafermeier, who often references Malcolm Gladwell and his well-known idea that mastering any complex skill requires roughly 10,000 hours of focused practice.
If someone dedicates themselves to trading full time—around 40 hours per week—those hours would accumulate in approximately 250 weeks, which is close to five years of consistent work. Of course, this is only a theoretical benchmark, but it illustrates an important reality: becoming truly skilled in the markets takes time, patience, and persistence. Even after several years of experience, traders can still refine their methods and climb to higher levels of expertise.
Trade With Meaningful Capital
Another unavoidable component of professional trading is adequate capital. Many people know the old joke about making a fortune in trading: “Start with a billion.” While that exaggerates the point, the underlying truth remains—trading with extremely small amounts of money rarely produces meaningful results.
Some retail traders attempt to compensate for limited capital by relying heavily on leverage, exposing themselves to excessive risk. The typical outcome is familiar: a margin call from the broker or frustration from repeated setbacks, which often leads to discouragement and stagnation.
Consider Trading With Other People’s Capital
So what can a skilled and motivated trader do if they cannot risk $50,000–$100,000 of their own funds?
One option is to trade with external capital. Proprietary trading firms, commonly known as prop firms, allow traders to access company funds once they demonstrate sufficient skill and discipline. These firms allocate capital to traders—often full-time professionals—who use short-term strategies such as day trading to generate profits.
For many aspiring professionals, prop trading can serve as a powerful stepping stone, providing both larger capital and a structured environment to accelerate a trading career.
Below you will find a curated list of proprietary trading firms that can potentially help traders advance their journey and gain real market experience.
Finding open positions won’t be difficult but getting in is challenging. Usually, excellent numerical and analytical skills are required and a degree in Mathematics, Engineering or Finance is not a disadvantage either.
What are investment strategies?
Choose the right broker
Where Can You Gain Real Trading Experience?
One of the key steps toward becoming a professional trader is gaining hands-on experience in real market conditions. But that naturally raises an important question: which broker should you use to do it?
From the brokers we have analyzed and evaluated, three stand out as particularly suitable options. If you are currently searching for your first broker—or simply considering switching to a better one—it is worth exploring some of the best platforms available for beginner traders.
Below, you will find a selection of brokers that offer a solid environment for learning, practicing strategies, and gradually building real trading experience.
| Saxo Bank | Fusion Markets | CMC Markets | Interactive Brokers | Capital.com | |
|---|---|---|---|---|---|
| EURUSD spread | 0.8 | 0.0 | 0.7 | 0.1 | 0.6 |
| GBPUSD spread | 1.3 | 0.2 | 0.9 | 0.3 | 1.3 |
| AUDUSD spread | 0.8 | 0.0 | 0.7 | 0.1 | 0.6 |
| EURCHF spread | 1.4 | 0.6 | 2.5 | 0.4 | 2.2 |
| EURGBP spread | 1.4 | 0.3 | 1.1 | 0.2 | 1.5 |
If you want to dig deeper into the topic, read our best brokers for beginners article.
What are investment strategies?
Summary on how to become a trader
Learn the theory
Trading stocks, futures, options and other derivatives are not for dummies. You need to understand the fundamentals and technicals in order to start building a trading strategy.
Get a lot of experience
Focus not only on quantity but quality. There is no point in burning one micro account after the other. This is the stage where most of the retail traders give up, as they don’t apply basic risk management rules. Also, trade with an online broker that will assist you with quality research and further advanced education. Feel free to use our broker comparison table.
Trade a reasonable amount
Get serious with trading on a well-financed account. If you are a whiz kid, you can turn your $5,000 into millions in a couple of years. If you’re not a genius you can still be successful at prop trading firms or if you have some great PR and self-marketing skills you can build your own brand and earn extra income from educating others using your proven track record.
Read on to take the next step in your trading career
- Study our detailed broker comparison table
- Check the best brokers for day trading
- Check the best brokers for options
- Check the best brokers for futures
- Check the best forex brokers
- Check the best CFD brokers
| Saxo Bank | Fusion Markets | CMC Markets | Interactive Brokers | Capital.com | |
|---|---|---|---|---|---|
| EURUSD spread | 0.8 | 0.0 | 0.7 | 0.1 | 0.6 |
| GBPUSD spread | 1.3 | 0.2 | 0.9 | 0.3 | 1.3 |
| AUDUSD spread | 0.8 | 0.0 | 0.7 | 0.1 | 0.6 |
| EURCHF spread | 1.4 | 0.6 | 2.5 | 0.4 | 2.2 |
| EURGBP spread | 1.4 | 0.3 | 1.1 | 0.2 | 1.5 |
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