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What Is Trading: Top Facts for Beginners

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Trading is positioned as a career, which is accessible without prior education, experience, or large investments. Meanwhile, many people hesitate whether it is really as easy to access as it is advertised by brokers. Thus, to clear up your doubts, we will explain to you how it works for real and what it takes to succeed in it.

In general terms, it involves choosing a certain asset, for example, a currency pair like EUR/USD, cryptocurrency such as Bitcoin, or a stock of a certain company, monitoring and analyzing the corresponding market, and selecting a moment when to place a buy or sell offer. Thus, the bigger part of a trader’s working day is devoted to research and analysis.

Every market is a system of trends, which are constantly changing. It is influenced by both external factors, like macroeconomic or political events, and traders themselves and their behavior, who, in their turn, can also produce a potent impact on the development of global corporations and even politics.

As a rule, traders choose between two approaches. The first one implies analyzing the market and making decisions in a manual mode. And the second one allows earning in an automated and passive way, i.e. you can use a program, which will open and close trades instead of you based on the requirements set.

What do you need to get started?

  • Basic education. Sure, we do not mean a degree in economics or anything like that, but you will need to go through a couple of online video courses and get a detailed answer to a question: “What is trading?”. You must not rely on your intuition or good luck purely.
  • Brokerage platform. It will work as an intermediary and help you trade on the interbank market. Besides, a decent broker will provide extensive functionality for research and analysis and offer additional instruments for protection against losses and investment automation.
  • Capital. Most beginners are greatly concerned about how much money they need to become such an investor. It may surprise you, but $200–500 is quite enough. At the very start, most traders face losses, so, there is no need to put large sums at risk. Besides, due to leverage offered by a broker, you can multiply the sums you bet.
  • Strategy. You can find information about available options in almost any guide. Familiarize yourself with all of them and choose the one which suits your trading style and risk tolerance level.
  • Gadget. Today, it is enough to have a smartphone or computer with a stable Internet connection.

In sum, we must highlight that trading is a kind of career that requires increased diligence and risk tolerance. There is a probability of losses, due to mistakes or unexpected market movements, yet, if you work hard day by day, you can manage to earn a few thousand dollars per month and even more (although you will need to wait a couple of years).