Many times when we see a person in front of monitors full of graphics, we associate it directly with the figure of the broker, but is it really a broker or a trader ? What is the difference between traders and brokers ?
Today we are going to focus on discovering the differences between traders and brokers. Do you know which ones they are? You can help us complete the information in the comments.
A trader is the person who is responsible for carrying out any purchase and sale of assets in the financial markets. Therefore, the traders’ job is to buy and sell, with the aim of obtaining profitability from these operations.
The fundamentalist traders are constantly watching the indicators, among which are: The interest rate, inflation and consumer data; as well as news about policy changes, interest rates or any other event.
We will distinguish between private and professional traders, that is, we ourselves, as investments, analyze the market and make purchase and sale decisions for different shares.
Professional traders who work in companies are usually in rooms where they usually have between 6 or 8 computer screens, in short, a trading room. Thus, traders can have greater control over the state of the financial markets. These traders are remunerated and also receive an extra depending on the profits they have made.
The trader performs these operations through a broker, being able to be a bank or a financial entity.
The different types of traders are:
Scalper: traders who are responsible for buying and selling stocks or currencies in the short term.Day Trader: traders who carry out a market analysis every day. Swing Trader: its objective is to take advantage of a market momentum (bullish or bearish), with a time period of more than one day but not longer than a couple of weeks.Position Trader: long-term trader.
A broker is a company or financial entity that carries out purchase and sale operations for its clients. In other words, carry out an intermediation by executing purchase and sale orders, thus receiving commissions for these operations.
We also know brokers as stockbrokers, the only brokers that are licensed to operate within the markets. Therefore, if we want to operate within the stock markets, we must do so through a broker.
The broker is the one that provides us with the platform to operate, thus connecting us directly to the market. In order to access these platforms, it is necessary to enter the broker’s website or download their platform and connect with a username and password, which you must have previously created.
We also find electronic brokers, they are brokers that are managed electronically and no longer launch orders through a bank or a securities company. These brokers usually have lower commissions than traditional brokers.
To make the purchase or sale of securities, the trader is the one who determines which shares to buy or sell and communicates it to the broker that is actually carrying out the operation.
Now we are going to know the main differences between trader and brokers:
The broker is the financial intermediary between us and the market, it offers the platform for the trader to press the buy or sell button.The broker offers us a platform to operate and traders use this platform to buy and sell shares.
Some traders find trading opportunities by looking at the fundamental indicators of the state of the economy. For example: The supply and demand of a currency decides the price and liquidity, so traders always keep an eye on the interest rates of central banks, trying to prevent in which direction the market can move.
Fundamentalist traders always look at indicators such as the interest rate, inflation, and consumption data. Much of this information is blurred by governments, according to a certain type of protocol over time (each government’s economic calendar), making it possible to create economic calendars that offer a certain type of scheme or momentary information.
Most forex traders use charts to decide when to enter or exit. Technical traders pay special attention to price trends, without losing sight of the charts along with the prices, volume, volatility found in the data it shows.
For example: If the price of a currency repeatedly reaches a certain value, but does not exceed it and there is also no downward trend, it can be deduced that the currency has found its resistance or support level. Many traders are attentive to trends that have occurred in the past, this in order to further argue their opinion on how far you can move if the price or support resistance breaks.