I’ve just been watching The Big Short (2015), a movie from the prolific Adam McKay. The film is a real progression as a director considering the hilariously silly Anchorman was his debut in the hot seat. On this occasion he deals with the world of trading shares and dealing with the financial crisis of 2007 based on the book The Big Short: Inside the Doomsday Machine by Michael Lewis. But despite the main topic this is still a film that delivers plenty of laughs. And serves as a great education for anybody interested in trading!
Margot Robbie explains the premise of the film perfectly…
HOW TO TRADE
Trading as a beginner can be exciting, but it can also feel overwhelming. If you’re brand new to the world of trading, or just haven’t done it for a while, you might feel like you don’t know where to start. But don’t worry! This article is going to outline everything you need to know before you get started trading.
We will outline what kind of trading accounts are suitable for beginners and which brokerage account is best suited to you, as well as some basic buying and selling strategies that will make your first trades successful and enjoyable.
Credit: Burak The Weekender/ Pexels
WHAT IS TRADING?
Trading is the process of buying and selling assets like stocks, commodities, and forex. When you trade, you are speculating on the price movement of assets by buying them when they are low and selling them when they are high. Trading is very similar to investing, but it differs in that investing is typically done for long-term growth, whereas trading is often done for immediate returns. Both trading and investing can result in a profit or loss, but they are done differently. Trading is used to either gain or lose money while investing is used to either make or avoid loss.
Many people engage in trading as a hobby or to supplement their income, but many also use it as a means to safely invest their money for long-term profit.
You can trade on several different platforms, or even in person. However, a great place to start trading is Forex. This is a great place to start trading as their markets are open five days a week, making them easy to access and find.
WHY TRADE?
The main reason people end up trading is that they are looking to make some extra money. Trading is a way to make money with minimum effort. No matter how experienced you are, you will make mistakes while trading, and that’s normal. Trading is a risky activity, and if you’re new to it, you are likely to make more mistakes than an experienced trader would. However, if you approach trading as a way to make some extra money, you may find that you enjoy it more. Trading allows you to take advantage of market movements, but you have to be disciplined enough to not engage in excessive speculation.
You can also use trading as a way to gain some investment experience and to get a better idea of which career path is best suited to you. It is important to remember though that trading is not everyone’s cup of tea, and that if you find that trading is not your thing, that’s completely fine.
WHAT DO YOU NEED TO START TRADING?
Before you get started trading, you’ll need some things. First, you’ll need to open a trading account. This can be done with a bank or a brokerage, but be sure the account is suitable for trading. A trading account should be:
- Dedicated for trading: It’s best to use a separate account from your everyday cash or credit card transactions. You want to make sure that your trading account is not connected to your main account in case something happens to it.
- Capable of supporting trading: You want to make sure your trading account meets the minimum requirements for trading. This includes minimum deposit and trading activity.
TRADING ACCOUNT
Your trading account will hold your assets (like stocks, forex, and commodities) and your losses (like brokerage, fees, and trading costs). You will deposit money into your trading account and will trade it away. Depending on the broker you use, you may be able to trade almost immediately upon opening an account.
However, it’s best to wait until a few days before trading so that you have time to properly research stocks, research brokers and establish a trading plan. Trading can be a time-consuming activity, so you don’t want to rush into it too quickly. Once you have your trading account set up, it’s time to start trading! You’ll want to establish some trading rules to help you trade with discipline. Trading rules can be as simple as “don’t trade if the market is down,” or “don’t trade for more than an hour.”
You can also set up a trading plan that helps you establish a trading strategy and track your progress.
ACCOUNTS WITH PERKS FOR TRADERS
Many brokers offer trading accounts with perks designed to attract traders. Some of the features you might find in these accounts include:
- Special trading software – This can be particularly helpful if you prefer to research stocks by reading financial reports and financial websites.
- Discounted brokerage fees – Many trading accounts come with free trades or discounted brokerage fees. For example, if you deposit $10,000 into an account with a $0 trading cost, you’d be able to make 10 trades for free. Other brokers offer higher trading amounts for free.
TWO-FACTOR AUTHENTIFACTION
Many brokerage companies require that you use two-factor authentication when logging into your account. This helps prevent hackers from accessing your account and stealing your assets. Most brokers allow you to enable two-factor authentication from your mobile device. You can also enable two- factor authentication from your brokerage account online. To log in, you’ll be prompted to enter your login ID and password, as well as your two-factor authentication code.
FINAL WORDS: WRAPPING UP
Before you get started trading, it’s important to know what you’re getting into. Trading can be exciting, and it can also be rewarding. However, it’s important to remember that trading is a high-risk activity. If you decide to get started, keep in mind that trading is a very time-consuming activity. It requires a lot of patience and discipline. With that being said, trading can be very rewarding if you know what you’re doing. With a little effort, you can make a lot of money trading.