Trading is one of the most popular ways to earn money now. The only issue is that it is so complex and depends on various circumstances that you couldn’t get a decent profit without considering carefully what happens on the market and how outer conditions affect it. The market changes are reflected in analytics and defined by various terms, like a diamond pattern, for example.
Before you even go to this page, look closer at the basic points that are particularly significant if you have just started trading.
The trading process – how it looks like
We’ve mentioned that trading is sophisticated, and to realize what aspects create such complexities, it’s better to start with defining the term itself.
The definition
Trade is an action that implies buying and selling something. Usually, you exchange for something worth something else, maybe in another form to make money. Thus, trading is possible for goods, currencies, or even indices (we’ll return to it later).
The one who is involved in this activity is a trader, whether he’s a buyer or a seller. Traders differ by the size of the orders they place and the effect they want to reach. So anyone, from individuals to governments can be engaged in trading. Most often when we hear the word trading, we associate it with foreign currency exchange.
The step-by-step process
The process of trading consists of 6 baseline steps:
- Selecting the pair to trade.
- Choosing the type of trade (purchase or sale).
- Defining the size – the regular size is 100,000 units, others are considered mini and micro.
- Placing the order – you need a platform for this.
- Observing and management.
- Close the order and sum up your results.
Depending on many circumstances your deal can be profitable, loss-making, or just ineffective (you neither lose money nor earn them).
The background
The mentioned circumstances are the background of your trade. To place orders timely you should analyze the market, geopolitical situations, and other points that can affect the fluctuations. These aspects depend on the specifics of an instrument you’ve chosen to trade.
Trading instruments and what they can be
The trading instrument is literally a thing you trade. They are divided into categories according to what particular things are traded on different markets. Some of the most common categories are the following:
- National currencies. The market is the most dependent on the US dollar, and some other influential ones are the euros, pounds, and others.
- Cryptos. Another instrument is related to currencies but it works a little bit differently.
- Commodities. Goods and resources that can be traded (e.g., metals or energies).
- Stocks. Companies’ assets that make you a part of their profits and losses.
- Indices. A little similar to shares, but refer to general statistics for a particular group of assets.
The finesses go far beyond this shortlist.
To realize the opportunities of trading you should understand what it is, which is impossible without self-education. Get your chance on FBS – a trading platform with over 14 years of experience and more than 23 million users!
