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What is trading?

Johana Strakova
07/01/2023

In this article you will learn a little more about what trading is, who it is suitable for and what to watch out for.

Under the term trading, you can imagine short-term trades that can last from a few minutes to a few days or weeks. You buy and sell with the aim of making money, so you need to buy cheap and sell expensive, or vice versa. In trading, it is possible to speculate on a drop in value, and it is therefore one of the few businesses that is resistant to recessions, so you can earn even during financial crises.

As soon as you start trading, you will see that the markets fall approximately 3-5 times faster than they rise, so paradoxically you can make more money faster and more on the downside than on the upside. Moreover, if you know how the markets work, can manage risk, have enough capital and control your psyche, you can make almost unlimited money!

The attractive thing about trading is that you don’t need any employees, all you need is a computer with internet and you can trade from anywhere in the world. The market is an endless river that is always flowing and it is up to you when you decide to enter the trade and when to exit.

You are on one side, another trader is on the other side, and when you make money, he loses. Money is just moved from one account to another.

But if you start trading without understanding and understanding the rules of this business, you will join the endless line of unsuccessful traders who consistently lose money trading.

So to sum it up, what are the things you need to start trading for a living?

Computer or laptop 🙂
Internet 🙂
Trading platform (for chart analysis and trade entry)
Analytical application (for finding business opportunities that most do not see)
Strategy
Keep your psyche under control
Be able to properly manage risk
Sufficient capital (one of the main problems of beginning traders is the so-called under-capitalization. People start trading with too little capital and this forces them to take too much risk and so-called over-trade, where it is difficult to keep the psyche and emotions under control )

Who is trading suitable for?

Trading is for everyone who wants to be their own boss, to be independent of time, place, and money, and who want to keep learning.

Trading on the stock market is not nearly as complicated as it may seem at first glance. We live in an amazing time where, thanks to the Internet, we have access to the same information as banks or investment funds and can use the same trading strategies as the biggest players in the financial world.

Of course, it is important to have rules in place and follow them. This is where most first-time market traders fail. It’s not that markets are dangerous. The market flows with its current, is completely devoid of emotion and does not care about the needs of the traders who participate in it. In most cases, the greatest danger to the trader is himself.

Most traders focus only on profits in the beginning, but the only thing we can control when trading is risk.

If you can handle this part, then you have a great chance to become a long-term successful trader who can make a living from trading.

Pitfalls of trading and what to watch out for?

Trading itself has no rules, you can buy at any time, sell at any time, and that is the biggest disadvantage for most beginning traders. It’s a get-rich-quick place that’s alluring, and that’s exactly how most people approach it in the beginning.

First, you always need to create your own rules, plan and system to be consistently profitable. There is no art to making money on the next trade, the key is to retain profits, protect capital and be consistent. The key to successful trading is simple – have a strategy and stick to it, cut losses and be mentally resilient.