Trader
A market participant who buys and sells to profit from price movement over short horizons rather than from the underlying business.
How it is identified
Test: the entry and exit decisions rest on price, volume and positioning, with a horizon measured in minutes to months
Unit
qualitative
In depth
Trading is a zero-sum activity before costs and negative-sum after them, because one participant's gain on a price move is another's loss, and both pay charges. That does not make it unprofitable — it makes profitability dependent on having an edge over the counterparty rather than on the market rising. Traders manage risk through position size and stops rather than through diversification and time. The dangerous state is holding a losing trade past its stop and reclassifying it as a long-term investment, which converts a bounded loss into an unbounded one.
Worked example
A trader with a 45% win rate, an average win of ₹3,000 and an average loss of ₹1,500 has an expectancy of 0.45 x 3,000 - 0.55 x 1,500 = 1,350 - 825 = ₹525 per trade before costs. The edge lies in the size ratio, not in being right most of the time.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Trader” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.