Trading in the stock market is one of the types of income generation on the Internet. A lot of stories go around such earnings, many of which relate to the fact that exchange trading is a hoax. A refutation of this can serve as a story from the life of a pensioner from Germany named Ingeborg Motz. A woman trading on the stock exchange was able to earn a million at the age of 75.
Three categories of newcomers to the market
All people who turned their attention to the stock market can be divided into three groups. The first includes traders who view the market as a gambling environment. They believe that working on it does not require effort, but at the same time will not be able to bring a large amount of profit. Often, they turned their eyes to the securities market because of the stories of brokers who want to get new customers.
The second category includes people with knowledge of finance, investment and stock markets. Their decision to try their hand at trading was deliberate and balanced. Such people often lose a certain percentage of their initial capital due to poor stock market training.
The third group is people who are serious about the process of making money. They thoroughly studied this type of work before making their first installment. Most of these people remain potential traders, because in the process of preliminary market analysis they are scared of possible trading risks, so they decide to stay out of the stock market.
Pros of trading on the Internet
Online trading has several advantages. The most important of them is the possibility of obtaining a stable income. Also, these receipts can be officially registered. Like all types of work on the Internet, trading in the stock market does not require any extra effort. A trader can earn money while sitting in his apartment.
Another advantage is mobility. A trader can quickly sell his securities if they begin to fall in value. This is done in order to leave losses to a minimum.
The stock portfolio is formed at the discretion of the trader. Issuers can be disposed of immediately before they begin to incur significant losses.
Scalping
Scalping is one of the most famous and popular stock market trading strategies. It belongs to the category of speculative and is used on short timeframes. The essence of the strategy is to close the deal at the moment it starts to make a profit. At the end of the last century, the duration of the transaction was several minutes. Nowadays, in order to close it, a trader needs a couple of fractions of a second.
To apply this strategy, the following conditions must be met:
- highly liquid instruments;
- small spread;
- low volatility;
- low commission.
Each transaction brings no more than 20 points of profit. Significant income is provided by opening a large number of transactions.It is very important to learn about the commissions of the exchange and the broker before using the scalping strategy of trading in the stock market. It is necessary that the level of profit exceeds the amount of fees.
There are three scalping methods: pulse, classic, and hybrid. The first type involves a permanent assessment of markets and financial instruments. Subject to trading on the Russian stock market, the trader should monitor the movement of US and European futures, as well as the US dollar and oil. The second method is to determine the difference between supply and demand, which can cause quotes to move. The third type of scalping involves a combination of the two previous methods.
Swing trading
The basic principle of this strategy is to trade stocks towards a long-term trend. However, it is necessary to start trading only in the event that a number of transactions have passed in the opposite trend.
One of the most reliable options to open a position is to open on an uptrend after a wave of sales. After a series of purchases occur on a downtrend, it is necessary to open a short position.
Day trading
This is another type of speculative stock market trading strategies. It got its name due to the fact that all transactions must be completed within one day without transferring operations to the next session. Using day trading, a trader can hold financial instruments for a period from several minutes to several hours.
For transactions that are conducted intraday, technical analysis is characteristic. Market participants can also use margin trading in order to increase the amount of income received. However, along with an increase in profitability, risk also increases.
Investors
These are stock market participants who prefer to hold financial instruments (as opposed to speculators). They do not take into account the fluctuations that may occur, as they believe that over time their patience can pay off.
All investors can be divided into three types: long-term, short-term and medium-term investors. The former invest their money in stocks of promising companies for a period of twelve months. They use fundamental analysis and take into account the economic and political situation in the state.
Short-term investors hold financial instruments for a couple of weeks. In order to analyze the chart, they use daily and hourly time intervals. Medium-term investors can hold stocks for twelve months. They work on daily and weekly time frames and use both fundamental and technical analysis.
How to start trading
First of all, you need to decide on the minimum amount of cash for trading. You should not immediately make a large amount of money, as the sad experience of many traders indicates that the first steps in the stock market most often bring losses.
Then you should be trained in the basic concepts and principles of trading in the stock market. For beginners, there are a large number of special textbooks that describe the main aspects of working with the market. Before you start trading, you need to familiarize yourself with such two concepts as fundamental and technical analysis. The first is studying the real factors of a political, economic and psychological nature that can affect the quotes of financial instruments. With regard to technical analysis, he studies the movement of quotes through graphing. Its purpose is to predict changes in quotes using mathematical techniques.
The next step is to choose a broker to trade in the stock market, since without his help it’s very difficult to gain access to transactions.That is why everyone who wants to make a profit trading on the exchange resort to the services of intermediaries, which can be not only brokerage companies, but also commercial banks. The main points to consider when choosing an intermediary are the reliability and size of the commissions required to pay when making transactions, withdrawing funds and servicing an account.
Next, you need to install the terminal. There are a large number of platforms for trading in the stock market. On the intermediary's website, you need to download a special application that will provide access to the market. Before you start trading, you can get training using a demo account. It allows you to fully master the operation of the terminal and create your own strategy, which can be applied when trading using real money.
Platform selection
This is one of the most important stages at the beginning of work in the stock markets. A similar transaction can bring different profits to a trader on different platforms. There are four main criteria for choosing a broker:
- convenience;
- functionality;
- availability of access to the exchange;
- amount of commissions and fees.
These characteristics are basic, but not the only ones. Each trader has his own list of platform requirements that he has developed over his career as a trader.
The best platform for the versions of many specialized publications is the “Screen Market Systems”. It provides a wide range of functions, providing high-quality and convenient operation.
rules
Professional traders have developed several rules for trading in the stock market, which must be followed not only in order to make a profit, but also in order to minimize losses.
The first rule is not to go all-in. A trader should not risk all his capital. Trading stocks in the stock market requires the investor to take the right approach and informed decisions. It is not recommended to trade on borrowed money or on those funds, the loss of which will cause a trader big problems. Quotes can move sharply down and up. This often causes a loss of capital. Especially among newcomers to the market.
The second rule is to cut losses. Every merchant must control his greed. It appears in those cases when the transaction begins to make a profit. The main mistake of the trader is that he completes the operation before it can earn maximum income.
The final rule is risk sharing. You should not invest all your money in one tool in pursuit of excess profits. In order to reduce the risk of losing capital, you need to form a portfolio using different securities.
What not to do
Every minute on the market there are many new options for making money. It is important to remember that all money cannot be received. Therefore, it is better to concentrate on one big deal than spray on a lot of operations, which are more likely to cause loss of money than their increase.
Also, financial instruments whose value is falling should not be purchased in the hope that they will become more expensive. Such a strategy gives a positive result very rarely. In the long run, this will cause large losses.
Stock market or forex
Trading the stock market is much more complicated than working on the Forex. The difference between them is that in the first case, trading is carried out with stocks and other securities, and in the case of Forex financial pairs are currency pairs.
The downside of the stock market is a small leverage. This means that traders with small deposits are less likely to conduct successful trading. Forex is a volatile market where you can earn more in a short period of time than in the stock market, which is focused on long-term investments.
