Trading for beginners: an introduction to the topic
To exchange trading was successful, you need to have a sufficient amount of knowledge. This will avoid stupid mistakes and minimize the risks of losing money.
In fact, we are not talking about visiting specialized educational institutions and obtaining a diploma in the field of economics and finance. To get started, it is enough to delve into the topic well and form an objective understanding of the stock market and what you need to trade.
We offer you to get acquainted with the basic concepts that are vital for novice traders.
Trading is: analyzing the market situation and concluding trade transactions
Trading is an activity that anyone can do in order to enter into trade deals and earn a substantial amount of funds. This kind of activity is carried out by people on exchanges, which are of different types. Everyone who takes part in such work is called traders. Most often, participants in exchange trading are people who have not only a sufficient amount of funds for investments, but also the ability to analyze the market situation and make accurate financial and economic forecasts.
Who is a trader
There can be no doubt that many do not fully understand this term. Most believe that this is a person who trades valuable assets on international exchanges. In part, this is true.
But we shouldn't forget that a trader is, first of all, an expert in the world of finance. This is at the same time:
- an entrepreneur who invests in his future;
- an analyst who can foresee the development of the international economy;
- a strategist who thinks through moves many steps forward.
All these areas of activity require completely different skills and abilities. Therefore, traders are very versatile and educated individuals. Apart from opening orders, they do a huge amount of work.
Trading for beginners will take 3-4 hours to a full day. The more you are willing to work, the faster the first results will appear. The profession is difficult and requires dedication.
If you are counting on quick money, then this is not what you want. It is not worth wasting time and starting something that you later quit. On the other hand, good traders are always financially successful and can afford a lot.
How much do traders earn
The myth that stock market traders are all poor people who lack the intelligence to understand the absurdity of their occupation was invented by burned-out traders.
They willingly share their experience with newbies, but they are silent that they have done absolutely nothing to trade with profit. To open an account, make a deliberately unprofitable deal, and be left without money, you don't need a lot of minds.
Experts remind that trading for beginners should be considered in the context of:
- the basics;
- testing on a demo account;
- choice of rules and strategies;
- real trade.
Each of the stages presented is also divided into smaller steps of the ladder, which must be overcome by everyone who wants to earn a lot.
And experienced traders do have decent incomes. Consider an example, depending on the amount of the deposit:
- at $ 1000 – a possible income of $ 350-600;
- at $ 5000 – a possible income of $ 2000-3000;
- at $ 10,000 – possible income of $ 5,000-6,000;
- at $ 25,000 – a possible income of $ 15,000-20,000;
- at $ 50,000 – a possible income of $ 50,000-60,000.
You may have noticed a pattern that is a revelation for novice traders: the larger the deposit, the higher the income. This can be explained quite simply.
How to overclock profitability
In a month, you make not one, but several hundred transactions. Operating with small amounts, the order yield is 10-50 dollars. With large investments, profits rise to thousands of dollars. Accordingly, the total revenue is growing.
If you do not take into account such market monsters as Warren Buffett, who makes tens of billions a year, average traders are considered successful if they have an income of 5-6 thousand dollars. It is quite possible to reach such a level with a minimum deposit in 4-5 months of intensive work.
The fact that these numbers are true is evidenced by hundreds of reviews in which people say that they were able to leave work, buy a dream car, and completely change their lifestyle.
Not everyone can become a trader. It is easy to check whether you have such an opportunity. It is enough to decide whether you meet the following criteria:
- high-stress resistance;
- iron nerves;
- cold reaction to any event;
- iron will;
- mathematical thinking;
- the possibility of self-organization;
- having your own opinion;
- desire learns;
- striving to become a professional in their field.
Trading for beginners immediately places tough demands on those who want to master it. But, if you do not have one or more character traits, this is not a reason to be upset.
The most important thing for a trader is self-confidence. Decide firmly that you want to trade on forex and work on yourself. This is not difficult. Plus, just try all of this in your daily life and you will immediately notice that it becomes easier, better, and more enjoyable:
- the spouse will make concessions;
- the boss will give a raise;
- debtors will please with the return of money;
- children will cease to be nervous.
And that's just the beginning of a long list of changes. Therefore, you should not ignore these character traits. Be sure to develop them in yourself.
The concept of the market and its varieties
The next step is getting to know Forex. Trading for dummies gives the most simple and understandable concept of the market – it is an economic mechanism with which you can buy or sell valuable assets.
In practice, everything is much more complicated, since the stock and interbank markets are a reflection of the domestic and foreign economies. Accordingly, the basis of a trader's activity is the law of supply and demand.
It is this fundamental postulate of economic theory that will be the first for novice traders. Next, you have to find out about:
- what the market consists of (it is not only bitcoin trading);
- what is its composition;
- how the quotes change;
- what assets are most interesting for trading;
- what strategies are and how to use them.
- what stock market trading…
Knowing the basics poses the following task – testing the theory in practice. To do this, you will need to deal with a few additional tasks.
Types of trading
It is important for beginners to learn the types of trading (futures trading) before you start trading. Many beginners make a fatal mistake, trying to simultaneously use trading principles of different methodologies.
As a result, some trading options begin to contradict each other and this interferes with the successful receipt of profit from the transaction. In addition, different methods of analysis and planning are used for each type of trading.
This is the fastest and most aggressive way to trade. The volatility of quotes during the day or the week may below. But within 1-5 minutes of price fluctuations, high percentages can be reached.
Scalpers are those who catch such moments and open orders on the lowest timeframes. This method has one big drawback – a high-stress level. But scalping profitability is also high and allows you to increase your deposit faster than other methods.
In this case, we are talking about time frames from 1 hour to 1 day. This type of trading does not bring much profit, but it is best suited for beginners.
There are 2 reasons for this: minimal losses in the event of a mistake, the ability to learn to predict the market, and control emotions. In addition, in the event of a sharp reversal of time, there is more opportunity to minimize losses than with scalping.
Trading on long-term time frames
All market participants strive for this type of trading, but only owners of capital in the millions of dollars can afford it. Trading is carried out on timeframes of several weeks or months.
At such time intervals, it is easy to predict the situation and clearly foresee changes, but, as a rule, they are not too large. Therefore, to earn money, you need an impressive working capital.
Used by some nihilistic experts who deny general rules and strive to go their own way. The trader opens an order when he thinks that the situation is right and closes it accordingly.
By and large, this is the most profitable trading option, but it requires not just iron nerves, but a complete absence of emotions. The slightest weakness and the entire deposit will go to zero. Suitable only for very experienced and competent traders.
Traders who structure their trading based on the analysis of macroeconomic factors are called fundamentalists. As a rule, they work with time intervals from 1 to 3-4 days.
In such a timeframe, you can make clear forecasts, but you need to have an idea of how news feeds affect the market. Sometimes, even unrelated to the economy, a situation can collapse or inflate the dollar.
Fundamental analysis is preferred by traders with extensive personal experience. Relying on someone else's advice will not succeed.
It is most often used by beginners and is based on the following signals from specialized indicators. Despite the apparent effectiveness of the technique, in fact, it is the weakest.
The analysis itself is used everywhere, but it must be performed by a person and take into account hundreds of factors. Entrusting this question to robots is the height of recklessness.
Most bots function according to this principle. At the beginning of an uptrend, a buy position is opened, and when the price falls, a sell position.
This is the simplest and most practical option, but the profitability swing trading provides the minimum. Therefore, it is suitable for beginners or traders with large capital.
5 reasons to trade Forex
When deciding whether or not to trade, consider the following facts:
- Free schedule. Traders can independently determine their workload, decide when to work and when to rest. No bosses or subordinates. This option is suitable for those who want to devote more time to their family and hobbies.
- Financial capabilities. One of the legendary traders, Larry Williams, increased his deposit from $ 10,000 to $ 1,000,000 in just a year. And this is far from the limit.
- Self-development. Financial markets are constantly changing. This assumes that the trader never stops at what has been accomplished and must improve regularly. The constant need to work on yourself will provide a lively mind even in extreme old age.
- Realization of desires. Trading is not financially limited, there are no minimum or maximum limits. If you can imagine yourself flying a private jet or a butler inviting you to breakfast at his own castle – Forex can do that.
- Instability. Quote rates may not change the way the trader would like. The trend may continue for a long time and there will be no income. But at the same time, it makes us pay attention to other assets and diversify the portfolio.
Forex is financial freedom and independence from employers, government, crises, and other things that ruin the lives of most people. To get all this, you need to work on yourself and strive to become the best in what you do. And there is enough motivation for this.
How to become a professional
It is important for novice traders to follow the advice of experienced professionals. They have come a long way and know what is important to success. Find out what it looks like trading for professionals… We offer 5 recommendations that will allow you to avoid mistakes and achieve outstanding results:
- Military discipline. Having opened an order, you have already chosen a strategy for yourself. Stick to it to the end, whatever the circumstances. The market moves in a circle, sooner or later your persistence will be rewarded.
- Reasonable deal size. Do not invest more than the amount you are willing to lose. In digital terms, this is no more than 15% of the deposit.
- Limiting losses. Even the most experienced traders make mistakes. It is important that this does not damage the deposit. If the situation has followed a different reversal, make sure that the amount of losses does not exceed 1% of the deposit.
- Learn from mistakes. Each problem situation is your contribution to the school of life. Treat even negative experiences as part of the learning curve. Introspection will prevent you from doing stupid things in the future.
- Patience comes first. You can't just go and become a top-notch trader. No matter how much money you pay for training, you will not be able to become a Forex assistant in a couple of weeks. This takes years. As the saying goes, “for a pretty penny, for a scar” a trader increases capital. This is the only correct option.
Use these simple tips in your practice, and you can achieve tremendous results and accumulate a decent fortune. Remember, making a dollar is much more difficult than losing a thousand.