New technologies have opened the door to popularization of trading, since today everything is possible from home, from working to buying the pantry. Before, trading was exclusively for financial experts and the investor elite; hence, the high level of information that the majority of the population has about the stock market world.
What is online trading?
Online trading It occurs when financial instruments that are listed on the stock exchange are bought or sold, through a platform that an expert broker will provide us. If so, we will not need to go to offices of the intermediary financial institution, a few clicks will be enough to start performing online trading.
Wall Street, In New York it has a whole computing world under its central premises. Operations translated into binary system go through the Internet connection on the Atlantic seabed. These submarine cables are the information highways. When a trader carries out operations from his home in the American stock markets, he will receive the information in real time through these structured cabling systems. In the trading online the delay in the received signal is inadmissible. Because with only a few seconds of delay, they are vital when many orders are placed in the market at the same time.
Income from operations it is ordered by time of arrival; for this reason many houses of brokers They place their computers in the subsoil of the most important stock exchange headquarters worldwide so as not to miss a second in obtaining updated information regarding the operations that are carried out. An example of how distance benefits speed is that receiving information in milliseconds can change the entry of positions in a large investment fund.
What is required to do trading?
Before it used to buy or sell shares at the bank's offices personally, causing chaos for the masses of people. Later, investors began to do it by telephone, until the last decade that the internet began to become popular and now most of the operations are carried out through this medium.
What it takes to be trader online there are four fundamental requirements:
- -A computer or laptop
- -Hiring the services of a broker that you enter the platform trading, as well as your operations in real time
- -Have a free capital of about 5.000 euros for shares of trading
- -Possess the knowledge of how to correctly use the trading.
Unfortunately, many novice investors believe that operations of trading they are simple and that there is a 50% chance that assets will go up and a 50% chance that assets will go down. Less than 5% of individual investors earn consistently on the stock market and takes a long time to form traders complete professionals who perform professionally in their work, although the risk factor is always latent even for the best trader.
The investor has to open an account demo if you want to dabble in it trading world, This is a simulated virtual account with play money, which is used to experience the ways of investing and how to move in the market. This phase of experimentation should be practiced for months and try to invest as if the money were real to consider the latent risk factor.
You have to take into account the factor main reason that 95% of individual investors fail in their operations: the psychological factor.
In rural areas of India, families in charge of a blind minor frequently isolate and deprive him/her of the care and attention they provide to their other children; such situation becomes even more severe among lower-caste families, orphans and if the blind child is a girl. operations of trading emotions such as: greed, greed, fear, uncertainty, euphoria, or hope should be minimized or suppressed, you cannot be guided by these as they will cloud your judgment and cause you to make hasty decisions. The way to minimize them to survive in the stock market is:
- –Having a method of investing: We need to work out an objective investment method, by which we know when to buy, sell and when to stop. That method needs to be tested over and over again in demo mode. If we do not have a well-developed method, we will end up buying because of sudden emotions and not with an analysis of the circumstances. Its method has to go according to the time horizon in which it is visualized: intraday, short term, medium or long term. Each time horizon has its advantages and disadvantages that must be evaluated and tested in the phase demo as often as necessary.
- –Always considering the risk: Putting investment limits, diversifying capital, as they say out there, not putting all oranges in the same basket. Start investing with only a small part of the total capital available.
- –Do not use leverage: The success of trading has motivated the creation of platforms with derivative products, with them an investor can earn a lot of money by investing a small sum of capital, using the so-called leverage effect. In no case a novice investor should leverage or at least not abuse it. The novice investor who does not know the way of trading, always think first about what you want to win, when the first thing to consider is what you can lose. You should never risk more than 2% of the total capital to invest in a single movement or operation
- -Experience: Trading requires constant learning, perseverance and practice in the stock market will develop a nose to buy and sell on time and get the most out of your financial operations.
Is it profitable to venture into trading?
It is profitable if we gather what is needed and do what is required, the first thing we need to investing in the stock we know it is money. Without capital we will not even be able to speculate and speculation is the best work tool, so the first thing we have to do is protect it; since with the absence of capital we will not be able to invest more.
When you have a lot of capital it is obviously easier to live off the stock markets, because it would only be necessary to earn small returns to get considerable sums of cash. Obviously this depends on what capital we consider necessary to live; This is a very personal matter, but above all you have to be realistic and have realistic goals. Having little capital will limit us from a good diversification of investments.
The problem again is time, as we have little money, and we want to win at all costs, the investor usually takes very high risks that his capital allows him to seek to earn money quickly, it will lead him to ruin quickly. There is only one reliable method of winning and survive in the stock markets, This is making money little by little, while constantly evaluating the latent risk. For example, if I have ten thousand euros available to invest, it would be advisable for each operation carried out, to use stops that if they do not work as planned, the losses do not exceed 200 euros.
There is no reason to be in a hurry to become traders, because those who rush tend to last very little in the stock market.
El online trading, it is nothing more than constant study, absolute discipline and total effort. 95% of individual investors fail in their attempt to become professionals, the problem is that the majority of this 95% have not made an effort to learn how the stock markets operate globally, nor have they developed any method of trading, buying and They sell by intuition or emotion.
Something that should be avoided at all costs is investing with money that we use to buy basic necessities, since if this money is lost, it will fall into a state of financial crisis Well, he will have neglected the most important thing, his personal life and that of his family probably, so the necessary accounts must be properly carried out so that we divide the money that will be delegated for basic living expenses and the budget that is free of this, you can Invest without fear of losing everything in a bad investment, an effect that happens frequently with people who bet, this is not random, it is constant practice and knowledge of the market.
A very popular myth is to think that main objective of trading is trying to guess what is going to happen in the market. The trader you have to try to take advantage of what the market offers you at the moment, not try to guess it. The market will always be right and trying to go against it will be very absurd.
It is important to consider that that traders they constantly live with losses. Losing money is part of this business, from when you start to venture into it, until it reaches a professional level. You have to know how to take on these losses and move on despite them. Stops are our lifesavers in times of financial crisis. It is impossible to always win, but this should be your premise trying to make appropriate and prudent moves always reasoning with statistics without making hasty decisions. It is in this sense, when the experience becomes very important, since in the first years that share purchase and sale operations are carried out, it is very difficult to see how a stop loss jumps and after that the asset progressively evolves as it initially did. Thought. That leads to many traders, to stop using the named stops, a step that will lead them to ruin because they are a fundamental piece of success in the market.