Everything you need to understand about trading
Trading is a great ally of the investor. Whether to flee the crisis or simply to increase assets. And it is increasingly common for professionals from various areas to enter the financial market – even those who are employed and have a solid career.
All because trading is a very interesting way to obtain higher profits in a shorter period of time. So, if you want to know better this activity, see here all you need to understand about trading to become a successful trader and multiply your income!
Enjoy your reading!
After all, what is trading?
The word trading comes from English and means to trade. This way, we can understand that it refers to the trading processes in the market, such as buying and selling stocks, bonds, currencies (Forex), among others.
Considering this definition, many people understand that trading works like other investments. The difference is that the main objective of the former is the valorization of capital, while in the latter the goal is to produce income over time.
In other words, trading is also an investment. The point is that you buy an asset based on a specific circumstance. After that, you expect it to appreciate in a certain period to obtain a capital gain.
With investments in general, you apply it in stocks of companies that have a greater stability in the market, for example, to produce income over time. The profit comes from interest and dividends.
The advantages of trading, besides the leverage with controlled risk, are: high liquidity (operate day trade and leave the market quickly in various assets, without problems), opportunities to operate 24 hours and diversification (several different currency pairs, gold, indices, etc.).
All this makes it possible to achieve a higher return, especially when we go into automated trading. This means better chances when we compare them to traditional investments.
How to operate
If you are thinking about entering this type of activity you need to know that this is a segment where one loses and gains alone. Soon, in trading, you will be totally responsible for your operations.
With this, it is necessary to dedicate yourself to learn about the main schools of analysis, like the fundamentalist, make some simulations, invest in knowledge and only then launch yourself to the market.
It’s also important to be aware that it’s normal that you have some losses when trading. However, the secret to succeed is to minimize the losses and, in the long run, make the results consistent.
This conquest comes with time, and the most experienced traders become successful by being able to refine their methodologies. That’s why it’s essential to broaden your knowledge and define the best method for you.
So, remember that in variable income you need to focus on the long term so that compound interest can multiply your capital over the years. And this does not change for investments with robots. With them, we seek to have more control, optimize profit and reduce risk.
However, it is a long term investment in the same way. And there will still be negative months or less favorable * as far as this is totally impossible to combat * in variable income.
General overview to start
Now that you know the importance of focusing on the long term, know that you can get fantastic results in the first months. But, this is not the kind of investment that you will make money in a short time (even multiplying with robots).
It’s not for what reason: simply because you don’t know exactly what the next months will be like. And trading will continue to be variable income: an application that, of course, involves risks. Keep this in mind.
This way, just make available a capital that, in a last hypothesis, you can loose. Of course money is always needed. However, this amount should not put your financial security at risk – in case you lose it. And that goes for any form of variable income.
On values, in automated trading it is possible to start with accounts from 250 to 1500 dollars, with one or two robots – this second option is interesting to start a portfolio and diversify.
Already in larger accounts, it is worth investing in several EA’s. So, before deciding which format is best for you, evaluate how much you want to make available in the first moment. Another question that needs your attention is in relation to how to operate as we will see below.
Manual or automatic trading?
There are two ways to trade: manually or automatically. Although it can’t be said that one model is better than the other, these formats present specificities that serve different trader profiles.
Manual trading, for example, requires the trader to update himself more frequently and have more time to trade. On the other hand, it brings more ease when it is necessary to change strategy in the “feeling”.
Trading with robots, or automatic, offers greater operational agility, in addition to mathematically proven statistics. It is ideal for those who have little time to dedicate to this activity. Another point in favor is not being affected by the most varied emotional issues.
So, which format does it win in the investment battle? Check out all the details in this special publication of our blog on the subject! In it, you will find more guidelines to define yours.
I have absolutely nothing against manual trading and I even know traders who are very successful in this way. So, for me, there is no clash between the two operations. However, my focus is on automated.
Unfortunately there are many approaches stating that robots don’t work. But, this is something totally unquestionable. Only Stock Exchange, around 80% of the traded volume, comes from robots.
So if they didn’t really work, EAS wouldn’t be responsible for 80% of all financial volume, right? All major institutions, hedges funds, etc., use more and more robots. A reality that has been happening for a long time.
As for the results, they are there. There are several investment funds, including the most famous, that use only robots. Therefore, it is important to be clear: the automation is not in trial period.
Automated trading has been used for a long time and with great success by many people. It is something more than consecrated.