Knowing what trading is will change the course of your life and will make you earn money in ways you never imagined before.
We have been educated to think this is reserved for privileged minds and to be afraid to make money in the stock market, but nothing could be further from the truth.
We will show you how to make it possible, learning a skill that will accompany you for life, and you will have a source of extra income without the need for third parties that limit your profitability (or that is negative) to take a commission.
All you need is the will to do it and open your mind to new options.
What is trading?
In a few words, trading is buying and selling listed assets in order to make a profit, and these listed assets are traded in a regulated financial market that you can access electronically from your home, without having to go to a physical entity.
The price of these financial products moves according to supply and demand, i.e., how many people want to acquire or dispose of a certain product, be it stocks, commodities, cryptocurrencies, etc.
Knowing how to profit from these movements is part of a trading system that will not only allow you to get a return but also learn how to read a chart, identify market cycles (with their falls and recoveries) and also, why not, and refute the arguments of that brother-in-law who on big occasions boasts of making a lot of money in the stock market.
You may think that trading is not for you, that your studies belong to another sector, that it is not within your reach, or that making money in the stock market is impossible. This is not the case.
What does it mean to be a trader?
To be a trader, you don’t have to have six screens in an office, shout on the phone all day, or wear expensive suits.
A trader is someone who manages to make money in the market consistently. And it doesn’t matter if you do it in your pajamas from your laptop in your living room or an office.
You will become a trader when you understand the market and see opportunities where others only see imminent ruin or know when to take profits and get out of the stock market. In contrast, others think a sudden price rise will make them millionaires.
To be a trader is to use the stock market as a working tool from which to make money periodically, buying and selling simple and well-known assets, such as stocks and ETFs, or other lesser-known assets such as futures, currencies or cryptocurrencies. When you start dealing with crypto, you also start dealing with crypto online shopping, or you will even play crypto games or crypto casinos games because you will see how much easier and safer it is to handle crypto than real money.
How to get started in trading: First steps
1. Start reading and informing yourself
You must become familiar with certain concepts of the financial markets before you start trading, such as risk, volatility, or your profile as a trader.
You also need to be familiar with other concepts such as stop loss, indicators, Japanese candlesticks, and everything related to graphics. In trading, it is essential to know how to analyze and read the charts to choose the best time to buy or sell and make money with it.
Normally, it sounds like Greek to you at first. Therefore, in this article, you will find a series of resources to help you understand trading and where to start.
2. Know the main financial investment products
In this table, I leave you the seven most important financial products when trading and analyzing according to their risk and difficulty; if you are starting to trade, start with those with low operating difficulty, such as stocks and ETFs.
3. Choose a good broker according to your profile
You must look for specific essential characteristics when choosing a good broker, such as commissions, regulation, security, and financial products.
4. Apply the 2% rule in trading
With the 2% rule we mean that, while you are starting in trading, never risk more than 2% of your total account.
For example, if your total account is 10,000 euros, I recommend that you do not risk more than 200 euros per trade.
5. Start trading in the real market
Starting to trade in trading requires brutal emotional control.
That’s why stock market simulators are only sometimes the best option.
Your mind knows you will not lose that amount and stops training this vital part, the emotional control.
Contrary to what they usually tell you, trading with stock market simulators slows down your learning.
Is trading for you?
Trading is something that anyone can learn, although there are certain cases in which trying to become a trader is anything but advisable.
Let’s make things clear:
1. If the money you are going to use to trade is money you need to live on, stay out of it.
2. You must manage your emotions well. Do not underestimate the power of fear and greed when you have money in your hand.
3. Assume the possibility of losing money before you get into anything.
4. Trading is all about practice and practice. If you don’t have time, forget about trading.