"Number of" is a prepositional phrase that qualifies the noun "people." "Number" is not the subject but rather "traders" is and so the verb agrees with traders.

Another example:

"A large number of people are gathering." "A large number" isn't the thing doing the gathering the people are.

Prepositional phrases are easy to spot. This a good quick read:

http://www.chompchomp.com/terms/prepositionalphrase.htm

The key point is that "a prepositional phrase will never contain the subject of a sentence."

A simple mnemonic device kids are taught to identify prepositions is the "preposition mountain":

On the mountin, of the mountain, from the mountain, in the mountain, under the mountain, by the mountain, along the mountain. If it's logical in relation to "the mountain" it's probably a preposition.

It's worth nothing that there are many native English speakers that get these wrong :)