Imagine that you could have money for your whole life that comes to you month after month, without doing anything, and that would be a very succulent extra in your day to day life. This, which seems like a movie, is the reality for many. And the only thing they have done to achieve this is to learn all the ins and outs of what is to trade. In other words, they are able to buy and sell assets to make a profit on each sale.
But do you know how to do it? And what benefits and risks can it entail? If it is not very clear to you what trading is or you want to get started in this way of making money, here we tell you the basics you need to know.
What is trading
Trading should be understood as that power to negotiate in financial markets, that is, to be able to buy and sell listed assets. But to really work, you have to understand that it is necessary to buy low to sell high and, in this way, obtain an economic benefit from these operations.
Of course, it will not always be like this. There are times when you may want to sell an asset and then buy it again cheaper (especially when the operation does not come out and it will take a while to obtain the benefit).
Now, the sale of assets does not refer to just anyone, but rather trading refers only to those stocks that are going to be traded on a liquid market, to currencies and to futures.
Types of traders
Another aspect that you should take into account about what it is to trade is about the modalities that you can find. In this sense, you have:
- Day trading: It is a form of short-term investment, so short that they start and close on the same day (sales).
- Scaling: It differs from the previous one, because it is also short-term, in that the operations are not carried out in a day, but in minutes, and several times a day. For example, investing a large amount in very short periods (minutes or seconds).
- swing trading: In this case you have medium-term purchase and sale operations, with a maximum period of 10 days.
- Trend or directional trading: It is similar to the previous one but it works according to market trends. In addition, the operations do not have that medium term, but can take place over weeks, months or years.
- Social trading: Here you need a community or a group of traders to operate, and it is that what is tried is to take advantage of social networks and, in some way, teach beginners and put experts together with novices to learn and to practice (you always have to someone who really knows what he's doing, so he can miss out less).
Which markets are the best
As we have told you before, trading needs a financial market where you can operate. However, in reality, there is not just one, but there are several. The experts themselves recommend that, to get started in trading, it is best to concentrate and learn as much as possible about a specific market. Once it is mastered, and that you no longer have to spend so much time on it, neither to study it nor to carry out operations, you can cover yet another market.
Quoting all the markets out there could be very boring (and it is still a simple list). But we can give you an approximation of which are, right now, the most profitable. These are:
- Cryptocurrencies: It is a market that is based, not on "physical" currencies, but on digital ones. It is one of the most volatile that exist, because cryptocurrencies can change their value drastically (one day you can end the market winning 30000 euros and the next day lose 25000 of those euros). Operating in it is very easy, but it is not recommended to do it if you do not have the appropriate knowledge before.
- Options: It is not very well known, and it is the most suitable for professional traders, that is, it is not for novices. It is based on assets that have minimal fluctuations and profit can be made even in a small amount.
- Forex: This one, like cryptocurrencies, is better known, and in fact it is one that novice traders start with. It is characterized by being the market for "physical" currencies, that is, the euro, British pounds, dollars, yen ... It is one of the largest markets that exist.
- Commodity: As with the options market, it is not well known either, but it is one of the most profitable. In it you will find assets related to consumer goods, such as cocoa, gas, rice, etc. It is also more focused for professional traders.
Steps to trade
Now that you know what trading is, you have to learn what trading is, or what is the same, how to trade if you are initiated in this.
The first thing you should know is that it is not easy. You are not going to be rich overnight. You won't be able to increase your savings in a matter of days either. You must be realistic and, just as you can win a lot, you can also lose a lot.
Therefore, you have to go with your head, and knowing what you are going to do. What does that mean? Well, to trade it is necessary that you know what you are doing, in other words, you have to study before launching into it.
- Get advice from experts. But real experts. To do this, try to see if the results they get are positive. Never go or do strategies that you do not know if they serve to obtain results because it will be a waste of time.
- Apply what you have learned but have the ability to change the way you act, your strategy, based on the market and the situation that arises. And it is that you have to be prepared for change, especially in something as stock-market and changing as the currency market.
- Start with low-risk profiles and limited capital. In fact, you can even try fictitious markets, which simulate real ones, and which allows you to test to see how well you defend yourself.
Training and practice are what "make perfect" and if you do not want to venture without knowing (and lose money with it), it is the best advice we can give you. Do not launch without first not having clear all the knowledge you must have to operate without significant risks in your economy.