How to start trading?
Do you know that you can earn money from trading? In this article, we will tell you How to start trading. In addition to the most important information that the world talks about every day is trading. Enjoy reading till the end of the article to get the most benefit and start your own journey in making profits.
What is trading and how to start trading?
It is a type of trade that aims to earn profit. It refers to buying and selling and that thing is considered a “financial asset” or “Securities”. The goal for traders is to sell this asset again when its price increases to get a profit and increase their capital just exactly like trade.
A long time ago, trading was previously for different companies. There was a type of company that shares its stocks. However, after the technological development, many commodities and currencies entered into trading, besides stocks.
How did electronic trading originate?
After the occurrence of the technological revolution, the countries of the world became closer by using the Internet. It allowed the beginning of electronic commerce and trade through the online marketplace. This process is buying of goods via the Internet which is called a “trading post”.
Electronic trading concept
It means a trading software that allows traders of buying and selling financial assets through a financial intermediary such as many reliable trading platforms. Therefore it saves your time and effort to access the different financial markets without going to the actual stock exchange.
Banks were already using electronic transactions with financial institutions only. After the development of technology and Internet networks that became available to various individual traders, everyone could trade in the financial markets and buy and sell with ease. Nowadays it includes currencies, commodities, and various financial instruments besides stocks.
How to start trading?
If you want to start trading, you must know a lot of things in this field. We will begin now with the basic information you must know about trading first such as:
- The trading markets.
- Trading strategies.
- Factors affecting trading.
- Tips before you start trading.
What are the financial markets?
A financial market is a place that organizes trading orders from buying and selling in a central market. Its objective is to provide cash flow and capital for various commercial and economic activities.
What are the trading markets to start trading?
There are four main trading markets, but some of them affect the other, so you need to know all these markets in order to choose the market that suits you. They include the following:
First: stock trading market
There are many companies that are divided into many types; some of them are owned by one or two owners, while others have many stocks that are offered in the market for trading by others which is called “proprietary trading firm”
Second: currencies trading market
This market is divided into two main types:
Foreign Currencies (Forex market)
It is known as fx trading, which is an abbreviation for “Foreign Exchange Market”. It includes all the currencies of foreign countries such as the Dollar, Euro, Yen…etc.
It is a modern type of currency that has emerged with the development of technology and E-commerce. It includes many digital currencies, the most famous of which are Bitcoin and Ethereum …etc.
You can also read more about Bitcoin.
Third: Commodities trading market
It is one of the oldest trade markets in the old stock exchange. It includes all types of products, but the most popular types of commodities are gold, silver, oil, and other metals as well.
Fourth: Derivatives trading market
It means that you buy at a different price in the future. It has two main departments which are futures trading and options trading.
How to start trading with Powerful trading strategies
There are many types of trading strategies that you should learn and try to know which one is the most convenient for you and your experience.
First: Scalping strategy
Scalping means that you buy many trades per day that may reach tens or hundreds depending on your available capital. The goal is to get a small profit from each transaction by taking advantage of the bid-ask spread.
Second: Momentum trading strategy
In this type of trading, you follow the stock that moves significantly in one direction with a large volume and then buy them.
Third: Technical trading strategy
In this type of trading, you should study and analyze the charts of points and stocks and buy or sell signals.
Fourth: basic trading strategy
This strategy is done through the basic analysis of the data and reports. It includes the actual and expected profits of companies. Besides the division of shares for them and accordingly, you can buy or sell.
Fifth: Swing trading strategy
The swing trader can keep their position for a long period. This period may reach more than a day or even a week, as changes in asset prices usually need several days or weeks to reap the required profit.
Factors Affecting Trading before start trading
The trading price may go up or down according to many factors that must be taken into consideration before trading such as:
1-The bid-ask spread
As the high demand for a commodity, currency, or stock increases, its price increases.
2-Profits or losses reports for companies
Reports of any trading firm affect its trading where the profit and loss are taken into consideration.
3-Corporate news affects stock prices
Some companies advertise themselves well to get a good reputation while others have bad news and once it spread among traders, it affects their stock prices.
4-Political events and wars
Political events greatly affect currencies, commodities, and company stocks.
The economy affects the rise or fall of stocks so the indicators change according to many reasons such as economic stagnation, prosperity, or economic inflation.
Capital flow affects trading, especially currency trading. The trade and the ratio of exports to imports play a major role in the rising or falling of currencies based on the trade balance of countries.
This appeared when the spread of the Covid-19 virus led to a decrease in trading and the occurrence of many losses, so global events should not be underestimated.
8 Tips before you start trading
First: Choose a trusted platform to start trading
Today, there are many free platforms without commissions for trading. Whether stocks, cryptocurrencies, digital currencies, or commodities. So before trading on any platform, you must make sure it is reliable and guaranteed. Whether you are trading with stocks, cryptocurrencies, indices, or Forex, you need an online broker.
Second: Educate yourself to start trading
You must acquire the necessary information about that world of as “Knowledge is power”. The more knowledge you get, the more strength you will be. In addition, you will get more success if you became a self-educated trader.
1-Read books about How to start trading?
There are many books about trading and its markets and strategies. Thus, do not hesitate to read useful books in this field.
2-Read financial articles
There are many experts in that field who seek to benefit every beginner. So you will find many articles about trading. However, you have to choose the best experts for that such as Bloomberg.
3-Join online courses to start trading
You should take advantage of the Internet; where there are many useful training courses in order to develop your skills and culture about trading. You can study the trading market that you prefer.
Third: Follow successful investors
There are many highly successful investors in trading. So feel free to learn from them and their successful trading strategies because it will save you a lot of time. As you will know the best trading tools that they use in investing. And also you will have a full trading education through them.
Fourth: Follow market news
There are reliable economic news resources that you can follow to enrich your information in this market. It will certainly help you analyze market movements from highs or lows to reach success. There are many examples such as Yahoo Finance or Bloomberg, where you can see the daily stock chart.
Fifth: Start trading with small and grow
If you will start trading, do not hesitate to start with a small amount. It is only the beginning until you gain experience by practicing. That will benefit you to invest a bigger amount later.
Sixth: Develop a trading strategy to start trading
You should make a plan for yourself after studying the market and getting enough information about the market.
Seventh: Patience and hope
Trading depends on experience and practice. So the more patience and hope you have, the more chance you have of success and making profits. So if you lose once try another time and don’t regret trying.
Eighth: Be aware of fraud
You have to get more knowledge and avoid insider trading, as it’s illegal.
In conclusion, trading is one of the most important types of current global trade. It is contributed by millions around the world. It also contributes to the economy of many countries. So you have to set strategies well to start trading. Then choose the right market for you, and be patient until you reach your profit target. Hurry up and open a new account for trading. And we still have more about trading and how to make profits from it.