I have been thinking lately about what trading really is and why so many people try to get into it without fully understanding what they are getting into.

Basically, a trader is anyone who buys and sells financial instruments aiming to make money from price movements. It can be stocks, cryptocurrencies, currencies, bonds, commodities, or CFDs. The important thing to understand is that it’s not the same as long-term investing or being a broker. A trader operates with their own capital, usually over short timeframes, and needs to make quick decisions based on analysis.

Now, if you’re wondering what trading as a profession really is, the reality is quite different from what most courses sell. The truth is, according to data I’ve seen, only 13% of day traders achieve consistent profitability within 6 months. And when we talk about 5 years or more, barely 1% are still making money. Almost 40% give up in the first month.

But well, if you still want to try, there are certain basic steps. First, you need to seriously educate yourself on how markets work. Watching a couple of YouTube videos isn’t enough. You have to understand technical analysis, fundamental analysis, market psychology, risk management. All of that.

Then comes the part of choosing what type of trader you want to be. There are several modes:

Day Traders close all their positions before the day ends. It’s intense, requires constant attention, and generates many commissions. Scalpers go even faster, making lots of small trades aiming for smaller but consistent gains. Swing Traders hold positions for days or weeks, taking advantage of oscillations. And Momentum Traders seek to capture strong trends.

Whatever your style, risk management is what keeps you alive in this. Stop Loss, Take Profit, Trailing Stop, diversification. If you don’t protect your capital, sooner or later you’ll burn out.

A simple example: imagine you’re a momentum trader in the S&P 500 through CFDs. The Fed announces a rate hike. The market reacts downward. You see the trend and open a short position, betting it will keep falling. You set a Stop Loss above to limit losses if you’re wrong, and a Take Profit below to secure gains if you’re right. If the index falls to your target price, you close and profit. If it hits the Stop Loss, you close and lose less.

What many don’t know is that trading is changing. Algorithmic trading now accounts for between 60 and 75% of volume in developed markets. That means you’re competing against machines, not just other traders.

My advice: if you want to try trading, do it as a side activity while keeping a stable job. Don’t invest more than you can afford to lose. And understand that what trading really is, is a high-risk activity that requires discipline, constant education, and emotional management.

Average profitability varies greatly depending on skill, experience, and strategy. Some win, many lose. There are no guarantees. But if you go in with open eyes, learn the fundamentals, and respect risk management, at least you have a chance.