Many times, we find ourselves asking the question “where should I invest my money?”. This question might accompany us for years as we reflect on how to manage the savings that we have been accumulating over time. Yet, have you figured out what to do? Let’s not get caught up with the details of this post and let’s dive into a very simple explanation of what Trading is and how to start investing your own money!
The first thing to keep in mind is that trading is a very broad umbrella term as it entails many different ways of performing this activity. These ways will differ based on the expectations and requirements of each individual.
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What is Trading?
Trading is the activity in which transactions, such as the buying and selling of stocks, commodities, currency pairs and other instruments, are carried out with the goal of profiting from the financial market. To do that, a thorough technical or fundamental analysis of market scenarios must be conducted.
The fundamental figure carrying out this process is the trader, who has a significantly different role compared to an investor.
Who is a trader then? A trader is a person directly in charge of managing a specific asset purchased or sold.
The key is that this monitoring process takes place on a short time frame where else an investor is interested in operating over longer periods of time.
Trading is generally classified into three types, based on the duration of each operation:
- Scalping. The trader opens and closes positions that can last just a few seconds.
- Day Trading. Operations are closed the same day they are opened.
- Swing Trading. The trader can leave open an operation and close it in some days.
How to Start Trading
First and foremost, be patient and don’t rush it. Profitability when trading is not achieved overnight. Dedicate time to learn how to trade in the stock market and to make meaningful financial decisions. Not to discourage you, but 90% of traders fail. Figure out in advance the errors they make so you can avoid them. DOWNLOAD NOW the document where you discover these 12 MISTAKES by clicking on the image below:
One of the initial concerns for people interested in trading is investing money to carry out this activity. How much do I need? Can I continue trading with that same amount or do I have to increase the funds? It goes without saying that the results will change based on your initial capital (€ 50 vs € 50,000) but there is generally no golden rule. Several other factors such as the level of knowledge, the strategy applied and our economic background will impact our operations.
In any case, the minimum deposit required by most brokers to open a live account is of around € 50 or less. So, leave aside concerns relating to limited portfolios because you can simply start small. Experts recommend practicing through a demo account at first, until you gain some experience and feel confident opening a live account.
Learning to Trade
Like with all new things, learning and training are essential to acquire the necessary knowledge and skills to carry out an activity in the best possible way. Even better if you have experts to assist you. In the case of trading, having an adequate background is essential to avoid having to bear significant financial losses.
Thanks to new technologies, access to online education is becoming easier and easier and you will find courses of all kinds on the web. Enrolling in a beginner’s trading course will show you in both a theoretical and practical way, how the financial sector works and how to start trading in the stock market. If you already have experience in the financial market, taking a more advanced trading course can be very beneficial in finding out how professional traders carry out their activities. Online courses are a good way to learn how to trade especially if your time availability is limited. The advantages here are several and include the possibility to learn from anywhere in the world and whenever you find the time.
Fundamental is also to stay informed about the subject and expand your knowledge in your free time. There are a number of recommended trading books that can offer you priceless insight in how to become a more successful trader.
Trading, like any other activity you have put significant efforts to learn, can become your primary profession and source of income. Remember that to live from trading, you must have discipline, consistency, patience and dedication but, above all, you have to be prepared to endlessly practice. Don’t let emotions take the best of you and will see how all your efforts will, little by little, repay you.
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