Beginner trader – important tips for beginners
Are you a beginner trader or a private investor? Let’s take a look at the definition and try to figure it out.
So, a trader is a trader in the financial/stock market who seeks to make a profit. At the same time, the trader directly works in the market: he analyzes the situation and concludes trade deals.
A private investor is an individual who invests (invests) his savings and savings in order to make a profit. An investor can be passive (work through a broker or just buy currencies, metals, antiques or securities and wait for better times to sell) or active (analyze the markets and make deals).
That is, an active private investor who is ready to trade in the stock market as a job, analyze and conclude transactions, is a trader. If you are ready to connect to the platforms and start working with your savings, you are a beginner trader. And as a novice trader, you should know the basic things about trading and strategies in order not to make mistakes yourself and not fall victim to scammers.
What are the types of trading?
Surely everyone is familiar with the concepts of “bulls” and “bears” in relation to the stock exchange. However, not everyone knows that these are the two main strategies of traders.
- Bulls are traders who expect prices to rise, enter into a contract to buy assets, and wait for a new increase in order to sell at a higher price and receive the difference as income. You don’t need to be a mathematician to understand that bulls stimulate the growth of asset prices (buying is going on – higher demand – higher prices).
- Bears, as they say, sell short, enter into contracts to buy and wait for asset prices to decline in order to buy as cheaply as possible. Obviously, the actions of the bears are pulling prices down.
However, this is not the only classification that traders’ strategies suggest. First of all, bulls and bears stand out when trading on margin (with “shoulder”). At the same time, at different times, the same trader can be both a bull and a bear.
Another important division in trading on the stock market is the types of transactions.
- Short trades – an asset borrowed from a broker is sold with the aim of further purchase at a lower price. The debt is returned, and the difference in price settles on the trader’s accounts.
- Long trades – an asset is bought in order to later sell it at a higher price. The difference in price is the trader’s income.
By the way, the names of the transactions are in no way related to their duration or the period of holding the asset – they can last for months or be made several times a minute.
There is another important division of strategies.
- Trend trading – a trader opens trades in the direction of price movement. This is generally the ideal option for a beginner as it is a simple strategy with minimal risk and the potential for high profits.
- News trading is an option for sophisticated traders. In this case, fundamental analysis is carried out first, and then deals are opened for multidirectional trends. This is a rather nerve-wracking strategy that requires exceptional analytical skills.
Again, this is not an exhaustive list of strategies. Experienced investors never stick to one style, they change and combine strategies depending on forecasts, market conditions and a specific type of asset.
But it is not enough to know strategies and classify yourself as bulls or bears. Successful trading requires knowledge of legislation and trading rules, an excellent theoretical base, an understanding of the functioning of the stock exchange and the stock market, planning and analytics skills, the ability to notice details that are insignificant at first glance, and, of course, free capital. Recall that it is worth starting with small revolutions. And high-class specialists to help you – do not avoid the services of professional brokers and financial advisors.
Trading platforms for the trader
Of course, in the 21st century, one of the main assistants of an active private investor is trading platforms for a trader. They are widely represented in the market and can be accessed through your professional broker.
Beginners should start diving into the IT part of trading by studying the indicators and analytical charts that are located in the interface of the trading terminal. They are easy to read and help you understand the basics. And then there are two serious levels: software for professionals and software for automatic trading (by the way, it is better to choose the one where the investor can analyze and change strategies).