Imagine a trader like a dealer, buying goods (let's say textbooks) from one source, and trying to sell it to another at a profit. You are spotting inefficiencies in pricing, and profiting on it.
example: Back in the days of eBay, many people made money doing this with real goods. But with advancements of technology, it's become more challenging to do this, anyone with a smart phone and an Amazon account can get the lowest prices for mostly anything.
The markets have become "efficient".
Market Efficiency: Implies that as a collective we have near perfect information, and thus the price you see, is an accurate price.
There is a long-standing debate on wether or not the financial markets are "efficient". If you believe they are fully efficient, there is no money to be made as a dealer.
Another popular method trader's make money is through speculation.
Markets have a large random element as prices are constantly changing to reflect the changes in the world.
Speculation: But betting on the outcome of future events.
As a speculator, trading becomes more like betting on horse races or sports.
You'll try and predict what outcomes will occur, if you are net accurate you'll make profits.
Be aware, how difficult it is to sustainably make profits as a trader. You quantitative abilities, qualitative research skills, and market instinct have to be spot on to win consistently. Most professionals incorporate algorithms in their trading, so you're also competing against that.
Taking the route of a trader, can lead to astronomical returns, but is an extremely challenging endeavour, some that many people deem as impossible.
Very few will develop the talent, and acumen to be able to do this profitably, but EquitySim is a risk-free way for you to find out.