What is trading?
Trading consists of the sale of quoted assets with a lot of market liquidity (currencies, futures and stocks). The financial market is electronic and regulated. Its objective is to obtain an economic benefit when the operation generates a capital gain.
It is a type of speculative trading, so it is subject to market swings. Your trades are based on buying an asset to sell at a higher price or selling an asset, to buy it again at a lower cost.
Normally, the assets on which ‘trading’ is carried out are shares that trade on very liquid markets, currencies such as GBPUSD or EURUSD and Futures, such as DAX and SP500.
Is it possible to live from Trading?
Yes. Of course it is possible to live on trading. Unlikely to achieve for a large majority, but possible.
Trader is the one who buys and sells any listed asset, with greater or lesser success, and regardless of the timeframe.
One of the reasons this trend has become popular is because of the entry of new technologies. Thus, there are specialized ‘online’ platforms on which you can trade and that act as intermediaries of trades or ‘brokers’.
With these platforms, trading on the stock exchange has become democratized. The figure of the investor who speaks on the phone and instructs his ‘broker’, disappears with this mode. Trades are now done on sites where all the services and content needed to trade are accommodated.
Types of trading
There are several trading modalities associated, among other factors, at the time when trades are kept open.
‘Day Trading’: The investor opens and closes trades within the same day of trading. It is a way to invest in the short term as there are usually no open trades to continue the next day.
‘Scalping’: the investor trades in very short periods, throughout the day, with trades that can last seconds.
Swing Trading: Trades can be left open at the end of the day and usually last about ten days.
Trending or directional trading: they do not have a time limit and consists of taking market positions in favor of the trend.
What it takes to trade?
In order to develop the ‘trader’ facet it is necessary to think first of all that may be needed:
Have a personal computer: preferably portable and an internet connection.
Hire a broker who supplies the trading platform: Such a platform must offer at least:
Real-time graphs of the behavior of the product to be traded.
Possibility to hire real-time quotes in the different markets and values in what you are interested in.
It must be a multi-market platform, i.e. you can access different products and markets from the same ‘broker’,
Possibility to manage the risk of positions through different types of orders.
Most importantly, make sure that the ‘online trader’ has direct access to the markets.
Own an amount of money that will not be needed to start investing. It should be noted that trades involve a commission. In addition, depending on the trade, the product and the market in which you want to trade, the trading regulator may require guarantees when opening a certain market position.
What to study to be a good trader?
Accessing certain career goals can be a difficult task. There are no exact formulas, precise studies to achieve certain jobs. A clear example of this is the ‘traders’ of financial products. An attractive career for many for the possibility of obtaining important economic benefits in a short space of time, but that encloses large unknowns, among them an essential one… how to become a good ‘trader’?
Have the right training: to operate in these environments you have to know what is being done. Training in this field is essential to avoid financial losses that can do a lot of damage to the personal economy. Online courses on ‘online’ on ‘trading’ have proliferated, although there are also training centres and face-to-face academies. In all cases, it is advisable to choose with criteria and apply well before starting to operate.
It should be noted that ‘trading’ is risky, so it is important to strengthen knowledge well. Money should not be spent irresponsiblely. According to experts, it is preferable that ‘trading’ be planned as a long-term race, with the least possible risk, than to get carried away by the ambition to make immediate profits. This will prevent financial scares that can lead the investor to bankruptcy.