▷What is Trading and How Does It Work?

Hello again!

Today I come to tell you what trading is.

I don’t want to go on too long, but the goal is to talk about trading in the most realistic and concise way possible (I don’t promise too much about the latter).

1. What’s all this business about?

Well, in this aspect there are a couple of aspects that we must take into account:

The optimistic view of trading: everything that advertising tells us and that concept of easy money and short-term money.

The negative view: substantial losses of money and lies like a house.

What is the real one? As you can imagine and like almost everything in life, not so much, not so little.

But before going too fast, what is trading, Ruben?

Well, to give you a summary definition (as promised, it is debt), trading consists of investing but in the short term, with the objective of generating profitability and profits.

2. Why start trading

One of the most interesting aspects to start in the world of trading is the decorrelation.

But… what does this mean?

Well, by this I mean that, beyond obtaining more or less profitability, what you should achieve is operating positively, regardless of the market situation. By this I mean that what you should always try is to generate profitability in any scenario. At least beat the benchmark.

And… what are the big lies in trading?

Well, I’m going to tell you some of them, don’t worry.

You always win in the long run

The first one is “yes, yes, with trading, you always win in the long term” MEC, mistake.

It is obvious that money can be made in the long term, but the “always” is someone’s invention.

I wish it were so!

What to do then?

Create your own systems, as I mentioned before, that give you confidence and objectivity in what you are doing.

Any time is good to buy a good value

Timing is very important, be careful with this.

As a trader, you must learn that there are good times to buy and very bad, very bad times.

And this is independent of you and even of your created system; It depends on the market and its evolution, and it affects everyone.

The stop losses

You will have read it a thousand times, but yes, I advise you to always position yourself in the market with a stop loss or stop loss.

The investor uses a stop to protect his capital from losses that can happen, as you well know. The trader, therefore, must know how to take advantage of that stop or devise them to limit losses out of pocket.

It is essential that you tattoo this on fire on your head, because after all, if you follow this action, You are going to protect the capital that you manage more times than you imagine.

Great trade, better trader

And please, never lose sight of the fact that, from your operations, you can create an asset.

And if you create an asset (even at the risk of all this sounding like a meaningless pun), you create a business, which you put at the service of investors.

In fact, it is overwhelming logic that I, as an investor, if I was attracted to your operation, I would keep it. And you, if you are the trader who has given me those benefits with a succulent operation, you get a percentage paid for your effort and dedication in the operation that has made me earn money.

So, As a trader, you are interested in having a good operation that brings you benefits such as own capital and foreign capital (from investors), that is, get extra profitability.

In future posts, I will tell you about the platforms that exist within this world to manage all this.

4. What are the types of ‘trading’?

I am going to expose you four, associated with the time in which the operations are kept open.

  • scalping. The trader operates with operations that can last a few seconds.
  • day trading. The trader opens and closes the operations on the same day of the negotiation.
  • swing trading. Operations for about 10 days approximately.
  • Trend or Directional Trading. There is no time limit. This modality consists of taking positions in the market in favor of the current trend.

5. What is needed to start trading?

At this point I am going to tell you some things that may be quite obvious to you but, if you want to dedicate yourself to the world of trading, they should become your Bible.

  • You must have a computer and a good internet connection.
  • As advice, I would tell you that it will be good for you to have a ‘broker’ that provides the trading platform. I will talk to you about these platforms later, as I told you before.
  • The following will seem overwhelming logic to you, but believe me, not everyone starts out this way and it is necessary to keep it in mind: have an amount of money that you “don’t need” a priori, to start in the world of trading.

And finally, I am going to talk to you briefly about the studies and training required to dedicate yourself to this profession without hitting too many stumbling blocks and to have knowledge of what is being done and what we are putting all our desire into.

6. What to study to be a trader

Dedicating yourself to the world of trading is not easy. That is to say, becoming a good trader tomorrow, being able to maintain good systems that generate short-term profits and that this is maintained over time…it’s not a piece of cake, not even close!

So yes, I would say that almost mandatory, you need basic training to dedicate yourself to this and, above all, commitment and enthusiasm to keep up to date, read, test, etc.

There are countless courses that you can take on the market in a rough way or on trading in an even more specific way. But the important thing is that you apply and learn to quantify what you do.

Precisely because of the risks that this profession entails in terms of economic issues, it is very important that you fully reinforce your knowledge in all these aspects, so that tomorrow you learn to value money, to manage it with a purpose, to retain it in the market, to bet with everything and, mainly, to obtain future profits.

7. Is it possible to live from trading with little investment?

Neither yes nor no.

Let’s see, many people think that if they don’t have a lot of capital to invest, they won’t get anywhere or that, on the contrary, they will have a stroke of luck one day and with little investment, they will conquer the market.

And nothing could be further from the truth, to think that this is going to happen is an absolute mistake.

But it is true, that if at first you have little capital to invest, you do not have to see it as impossible either, because the ideal is to start with little capital of your own at first in trading and grow through search and capture of a positive return.

With all this, I say goodbye for today and for now.

8. various conclusions

Don’t forget that perseverance, patience and creating profitable strategies and managing risk will be the key in this. They are fundamental factors to succeed both in your day to day when it comes to making arrangements, and in trading, absolutely.

I don’t roll anymore, really.

Show must go on.

Thank you for reading.

Leave a Comment