To succeed in today’s market there are several financial rules that require more than capital. In the search for profitability and economic stability, one word has taken relevance: Trading.
Do you know what it means? This Anglicism refers to trade or transaction, it is the purchase and sale of assets listed on financial markets. The idea is to make a profit or profit through speculation.
So, be prepared to know the 5 strategies that will help you make your management profitable and manage yourself with greater security. Find out everything below.
How does trading work?
Before its operation, it is necessary to ask: Do you know what trading is? It is the purchase and sale of assets with great liquidity in an electronic and regulated financial market.
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This type of investment has become popular thanks to new technologies and advances in information systems. So much so, that you can now enter the world’s largest market from your home or office.
With a computer and internet connection, it is possible to trade in the market with the highest transactional volume, the Forex market. Known as Foreign Exchange, FX or currency trading, it trades daily over 5 trillion dollars.
And every day, this financial universe attracts more investors from each country, which keeps it constantly growing. Now, what kind of assets are traded on Forex?
You can trade from stocks, commodities, CFDs, cryptocurrencies, futures, currencies, among others. It is a purely speculative action using an online platform.
The trading platform is a software that will allow you to visualize charts of the evolution of the financial product, open and close positions, use tools for your strategy, etc. You’ll have access to market analysis and more.
Do you know the types of platform available? There are many, from MetaTrader, NinjaTrader, Visual Chart, etc. This will be provided by your broker, the intermediary that will allow you to place your orders on the market.
It is essential to choose a reliable and regulated broker, authorized by the FCA (Financial Conduct Authority). You must understand that all stock trades are subject to market fluctuations, which will influence your investment.
That is, upward and downward price trends will represent a risk, so you should know profitable tactics.
Do you know the biggest advantages that trading offers you, in addition to buying and selling assets? Well, read on.
Schedules: The Forex market does not sleep and remains active 24 hours a day. This will allow you greater flexibility of operability. You can choose when and where to trade, as well as balance your activities with trading sessions.Uno de los beneficios que te brinda el trading es el horario 24 horas, para operar cuando quieras. Click To Tweet
Security: It is not possible that within FX, some investor has an important affect on the price of currencies. Everything is determined by movement and trends. It is one of the safest markets.
Liquidity: $5 billion a day is pretty liquid, right? In the case of actions, buyers or sellers may not appear. However, in Forex there will always be options, especially in currencies.
Low investment: You can start with a small investment capital, which would not be possible in other markets.
There are many benefits of trading, but do not forget to put into practice the strategies to move forward efficiently.
It consists of a short-term investment, here you invest large volumes in a short time. As an investor, you will be able to trade over short periods during the day and trades will last only seconds.
2. Trend Trading
Design your strategy according to market trends. Also called directional trading, with trades lasting weeks, months, even years.
3. Swing trading
With this strategy you will be able to operate in the markets in the medium term. Operations can be left open at the end of the day, lasting around 10 days.
4. Position Trading
This strategy is the longest of all, where you will hold a position of a security for months or years. Making use of this method will open the door to greater profits, capitalizing on trends.
5. Automated Trading
With autotrading you will be able to operate in the market in an automated way using software. It is a useful tool for those traders without knowledge of the area. The software analyzes the market through signals, news, etc.
Conditions for long operations
Do you know what a long operation is? It is characterized by buying stocks or currencies at an X price with the expectation of selling them at a higher cost.
Click to tweet: In trading you can apply long trades on CFDs, hoping that their cost will rise.
That is, you acquire the asset thinking that it can increase its value in the future. Next, know the operating conditions.
You can open a long position at the buy price.
Invest directly using CFDs or on underlying assets.
Conditions for short trades
A short trade or short position consists of selling an asset without having bought it before. This if you think that its cost will go down and thus be able to buy it in the future at a lower price.
You will be able to trade short on financial derivatives, since they have the possibility of leverage. These can be:
Futures, which are contracts for buying or selling assets such as bonds, indices, etc., at a fixed cost and certain date.
CFD’s or contracts for difference, where two parties exchange the difference in the purchase and sale price in a trade.
Sell on credit with your broker, where you can restrict leverage to avoid risks.
The world of trading is more than just transactions of various assets, using advanced technology. You need to integrate knowledge with a number of financial strategies to achieve your goals.
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