Just like the professional trader, the proprietary trader buys and sells securities on the stock exchange. Instead of depending on an institution or banking establishment, he works on his own account. He earns his living by making capital gains during his operations. The job of own account trader is a dream for many. However, it is riskier than a traditional profession and requires specific skills and knowledge.
The advantages and disadvantages of proprietary traders
Trading on your own has its advantages, but also its disadvantages. I invite you to take a prop firm challenge before launching into the stock market. Indeed, trading from home is a complex activity requiring:
– knowledge ;
– and experience.
For future traders, making this choice of part-time activity or full-time career is not trivial and must be carefully considered.
The advantages of becoming a proprietary trader
A good independent trader is his own boss. Its first advantage is obviously the free hours that it will be able to impose on itself. An independent trader will be able to:
– work at any time of the day, during market opening hours or outside;
– and also, organize your schedule as you wish.
In addition, the majority of stock market transactions today are carried out online. This therefore allows the trader to work on:
– his home ;
– or from a place convenient to him.
Embarking on a trading career requires significant capital to invest. However, it should be noted that the costs linked to professional activity are rather low. A good computer and a good internet connection will be all you need. A good trader on his own account also has the possibility of getting started without having studied.
Learn how to be a good proprietary trader
This remains difficult if not impossible in the case of the professional trader. Indeed, the latter generally works for a large bank or a large investment company. However, this advantage is also a disadvantage for the independent trader. His lack of experience can lead him to apply bad strategies. It is therefore essential to train yourself personally on the subject:
– in order to have the necessary foundations;
– to avoid the main mistakes made by beginners;
– and adopt good strategies from the start.
Even though these training courses for traders may seem expensive, they will allow you to seriously reduce your money losses when you start out. You can go to the independent trader training page to find the one that suits you best.
Good to know
As a good proprietary trader, you can also freely choose your market. But you’re suggested to choose the best prop trading firm. This is the complete opposite of professionals working for a company. The latter dictates to them which market they must invest in. You are also free to adopt your own trading strategy. Professional traders often have an imposed strategy, mainly via their investment horizon.
When you are self-employed, you can choose your investment horizon freely. However, becoming a proprietary trader also has its share of disadvantages.
The disadvantages of a proprietary trader
I see four disadvantages of becoming a trader on your own:
– The question of capital
– Loneliness
– A very fluctuating salary
– The need to choose a strategy adapted to your profile
The question of capital
A particular trader is obliged to provide his own capital to invest in the financial markets. A professional will have the capital made available:
– by his business;
– or by its banking establishment.
Using your own capital to invest is obviously riskier than using the capital of a company or its customers. If you lose this capital, then your personal savings will directly disappear. Fortunately, it is possible to start on the stock market with a small capital. However, you will need at least a few thousand dollars. This can represent a significant investment for some. Also, note that investing in the stock market means taking the risk of losing part of your capital. This is especially true if you have poor risk management. Conversely, your losses will remain very limited. So, only invest the money you are willing to lose and not a cent more.
