Many times when we see a person in front of monitors full of charts, we associate them directly to the figure of the broker, but is it really a broker or a trader? What is the difference between a trader and a broker?
What is the difference between a trader and a broker?
What is a trader?
A trader is the person in charge of carrying out any operation of buying and selling assets on the financial markets. Therefore, the traders’ job is to buy and sell, with the aim of obtaining profitability from these operations.
Fundamentalist traders are constantly observing the indicators, among which are: interest rate, inflation and consumption data; as well as news about policy changes or other events.
We distinguish between private and professional traders, that is, as investments, we ourselves analyze the market and make decisions to buy and sell different stocks.
Professional traders working in companies are usually in rooms where they usually have between 6 or 8 computer screens, in short, a stock trading room. This way traders can have a greater control over the state of the financial markets. These traders are remunerated and also receive a bonus according to the profits they have made.
The trader performs these operations through a broker, which can be a bank or a financial institution.
The different types of traders are:
Scalper: traders who are in charge of buying and selling shares or currencies in the short term.
Day Trader: traders who perform daily market analysis.
Swing Trader: their objective is to take advantage of a market impulse (up or down), with a temporary term of more than a day, but not more than a couple of weeks.
Trader Position: long term trader.
What is a broker?
A broker is a company or financial entity that carries out buying and selling operations for its clients. In other words, it acts as an intermediary executing buy and sell orders, receiving commissions for these operations (transactions).
Brokers are the only ones that have a license to operate in 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 trade, so it connects us directly with the market. To access these platforms it is necessary to enter the broker’s website or download its platform and connect with a username and a 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.
In order to buy or sell securities, the trader is the one who determines which shares to buy or sell and informs the broker that he is actually carrying out the transaction.