What is Trading ?
Trading is similar to any other type of investment except that it is done for a shorter period of time.
Simply buy at the cheapest price and sell at the maximum price. Buy low, sell high!
No. If you want to make consistent profits in trading, you must first learn the fundamentals.
Don’t worry about learning or trading if you’re working 9-5 and fine with investments. In that case, stick to your day job.
You can make this your career if you are truly passionate about trading or are willing to take risks now, in order to be profitable later in life.
Otherwise, you risk losing your entire capital, which can lead to frustration and reckless behavior, which can ruin your life.
Now you know that buying and selling for profits is trading, but you might have so many questions unanswered before you start trading. Let us see the common Q & As now..
Where can I learn trading for free?
Common Beginner Questions Answered
Can I make money online by day trading forex, crypto or stocks?
YES ! Yes doesn’t mean it is easy or risk-free. If you have what it takes to be a day trader, you can definitely make some quick bucks to even a full time income from it.
If not, do not worry! You can still make.some money from stock markets. Just choose according to your personality! You can choose among swing trading, scalping, positional, investments etc.
What is the difference between trading & investment?
If you exit the trade after minimum of 5 years, it is called investment.
If you exit the trade in few seconds to few months, it is called trading.
What is paper trading?
Before trading with your real money, you can practice your trades by entering all the details of your trade in a paper, notebook, or digital diary.
This helps you identify your strengths, mistakes, profit and loss of the strategy etc.
What is day trading or swing trading?
TYPES OF TRADING !
If you are closing the trade within a day, it is called day trading or intraday trading.
If you are closing the trade according to the position of the stock in the market that lasts for more than 2 days to few months is called positional or swing trading.
If you are exiting the trade within seconds or minutes, it is called scalping trading.
What is forex, crypto, or options trading?
Trading in different markets!
Your strategy can remain the same.
But the market is different.
There are so many types of segments to trade, like
It involves trading a currency pair.
e.g., EUR, GBP, JPY, etc.
It involves trading a digital currency.
Eg. Bitcoin, Ethereum, etc.
It involves trading the equity.
Eg. Amazon, HDFC, Bosch, etc.
Futures & options trading &
It involves trading the derivative of the equity.
Eg. Banknifty option July 2022, Amazon future June 2022, etc.
It involves trading the commodities.
Eg. Goldguinea, silvermicro etc.
What can I do when the market crashes? Short selling.
When the market moves down, you can sell your stock first and make profits when your stock goes further down. This is called short selling.
What are the trading platforms?
Is it possible to become rich from stock trading?
Theoretically & generally speaking, YES!
But your success depends on your personality.
It depends on various factors like
Money management &
Your trading strategy.
As the market moves in a random manner, it is easier to profit by controlling ourselves.
How much can you earn from trading?
There is no fixed amount of income in trading. But you can calculate the approximate return on your capital deployed.
*As far as I have seen, these are the approximate % monthly returns of a strategy with minimum 60% accuracy and 1:2 risk-reward ratio.
Equity swing trading – 10% to 50%
Options intraday trading – 10% to 100%
Forex or cryptocurrency trading – 10% to 100%
How much do you need to start trading?
Minimum capital required to start trading
(*This is not equal to the capital required for regular income.)
Indian equity – Rs 1
Nifty options – Rs 75
Banknifty options – Rs 25
Futures – Rs 1 lakh
Commodity – Rs 500
Forex or cryptocurrency – 10 $
What is after-hours trading?
The trading hours are different for each segment.
The forex market is open on weekdays 24*5.
The cryptocurrency market is open everyday 24*7.
The commodity market is open on weekdays, mostly longer than the stock market timing, depending on the country.
The stock and derivatives market is open on weekdays, mostly 9 am – 3 pm, depending on the country.
If you want to trade outside these market hours, you can place the order after market hours, but it will get executed when the market opens. This is called After-Hours trading.
What is stop-loss?
Stop loss order is used to tell the broker to automatically place the exit order if it crosses below a particular amount of loss. This helps in minimizing your loss and maximizing your profits.
Where to learn to trade?
There are numerous websites and youtube channels out there to teach you trading like
How many trading days in a year?
The stock market is open on all weekdays except on government holidays.
What is the secret to success in trading?
There is no one rule fits all in trading.
It depends on the individual personality and the capital deployed.
According to my personality, this is my formula :
Emotional management 50% + Money management 45 % + Strategy 5%.
What are the best practices to follow?
Use a trading journal to note down all the details of your trade.
Never trade without a stop loss.
Follow self-discipline. Eg. Max 2 trades per day.
Follow money management rules Eg. Risk 1% of your capital per trade.
Stick to ONE strategy and be consistent. Don’t change your strategy after few losses.
What are the topics to learn before starting to trade?
Types of Market,
Types of trading,
Basics of Fundamental Analysis,
Paper trading etc.
*Never have trading as your only source of income.
Trading profits can add up to your capital which can be used as the capital for business.
It is the easiest form of business anyone can start.
You can understand the basics of a business with a very little capital.
& lot more..
Check out these basics video to get a quick glimpse of trading as your regular job.
* I am an independent stock market trader for more than 3 years now and I have learned my lessons by paying the price in the market. I am sharing this post, so that you don’t have to risk losing your hard earned money. *
Hope you found this post useful. See you soon with another awesome hack.