Professional Trader is a person who has opted share market as a profession. Share trading and investing is the main or only job of a professional trader. He earns his bread and butter through trading and investing. As we all know that before finally choosing any profession as a carrier option everybody use three parameters. One, that profession should give consistent earnings so that we can sustain our lives. Two, there should be less risk. It means we want security and surety in profession. Three, the future growth should be there in that profession. The future growth can be in terms of earning growth, expansion of business or improvements in position etc. However there are many other aspects to measure the quality of the profession. But, above mentioned three parameters are commonly acceptable in general.
Let’s see which one of the above mentioned parameters are fulfilled by share trading. The first parameter is of consistent earnings. Gaining consistent earnings in share market is impossible for a novice trader or a person who is new to share market. For a new trader only losses are consistent. So for novice traders the first parameter is not fulfilled and they can not opt share trading as a profession unless they develop and become competent enough to fetch consistent profits. The second parameter is of safety, security and involvement of less risk in a profession. But, as we all know that huge risk is involved in this profession. Any of your trade can do worse than anything for you. So for novice traders the second parameter is also not fulfilled and they can not opt share trading as a profession unless they become expert in managing the risk and controlling the emotions while trading is stock market. The third parameter is future growth. What will be the future growth of share market trader, it also not sure. Share market is full of uncertainty. Hence aspect of the future growth is also doubtful.
So we can say that stock market trading is neither having clear cut future earnings or growth nor security or surety. But this darkness is only for new and untrained traders and investors. There are many people who have become master in share market and have chosen it as a profession. They have understood the share and become competent enough in this field of uncertainty. They have studied share market concepts and have developed themselves to control the emotions while doing trading. So anybody can become a professional trader only if he also understands the share market and controls emotions.
To understand the share market it is required to know fundamentals of the economy of the country and world, which are the driving forces behind the long term trend and direction of growth of the different sectors. It is also required to know the fundamentals of different sectors of the economy, which are the driving forces behind the long term trend and direction of growth of that particular sectors. After having such holistic view he will be able to see the hidden potential of different sectors of the share market . There are various sectors in the share market like transport, communication, infrastructure, mining, agriculture, pharmaceutical, automobile etc. There are different companies which constitute a sector. The trades should know and able to understand the fundamentals of the company. So that he can have an idea of future growth of business and earnings of that company. There are several companies listed in the share market but he should be able to choose best out of that. After understanding these fundamentals of economy, sectors and companies he will be able to select best company for investment. But this is not the final target of the professional traders. If a company is having good fundamentals the it is obvious that price of share of that company may be much higher than the fair price of the share. So the trades shall be able to calculate the fair price of the shares. The market price of shares has an great impact of emotions of the investors. Because of emotion of greed the shares of fundamentally good companies are traded at much higher price than the fair price in bull markets and in bear markets the opposite thing happens generally. So professional traders and investors accumulate shares of good companies when shares are traded at cheap prices and they distribute shares when shares become costly. When novice trader is greedy at peak prices and accumulating shares professional traders are booking profits. This smartness and control of emotions is expected for success in share market.
As we have seen that professional trades buy shares of fundamentally sound companies in bear markets. But when to buy a share in bear market it is decided on the basis of technical analysis of the share price. Here price – time period chart is analyzed to ensure that share prices are at near the bottom. Similarly while booking the profits it is ensured by professional traders that shares are sold at near the top.
Now it is understood that there are three key elements of trading in share market. First, fundamental analysis of the whole economy, sectors and companies. Second, technical analysis of price charts. Third, controlling the emotions.
Fundamental and technical analysis can be learned by studying books along with getting training from an experienced professional trader. Control of emotions comes with experience of real trading. After learning fundamental and technical analysis and after having sufficient experience in trading our actions become mechanical instead of emotional. So anyone can become professional trader after having good knowledge and experience.