Greetings to you, dear readers of my blog! Today I decided to tell you more about trading on the stock exchange. Many beginning speculators are often confused in its basic concepts. Therefore, I decided to pay special attention to this, since it is the exchange trading that brings the highest income among all other types of earnings on the Internet.
Over the past couple of decades, the popularity of trading has been growing every year. This is what becomes the main reason why more and more people are beginning to comprehend the basics of technical and fundamental analysis in order to learn how to correctly predict the future price movement.
There is a desire to learn this art, but most beginners simply get lost, where to start. And I understand them perfectly, since I myself was the same in my time. This is really a huge science.
After reading you will learn:
- what is the exchange and how to earn money on it;
- how to play the stock exchange via the Internet;
- where to start a novice trader;
- what is Forex, CFD, binary options;
- which broker to choose.
Well, in the end I will give some valuable tips for a successful start as a trader.
What is the exchange and their varieties
Since trading on the stock exchange is gaining popularity more and more, then the question that is often flashed on the net is it really possible to make money on trading and financial markets? Yes! This is a real way of earning, which has existed for more than a decade.
But unlike other simpler ones. earnings on the Internet, which I described earlier, here you need experience, knowledge, discipline, a certain psychological attitude, as well as the ability to analyze the risk and knowledge of money management.
Trading is not only work. This is a lifestyle!
The concept of "exchange" is very global. Share several varieties of exchanges:
- Currency - here trade is conducted in currency pairs, traders earn on the difference in quotations after the purchase / sale.
- Stock - as the main trading assets on this exchange are shares of companies, bonds and other securities. Recently, stock indices are also popular.
- Commodity - transactions are made with various elements of the commodity market: oil, gold, copper, silver, and so on.
In each country there are several stock exchanges, but the main one is always the same. For example, in Russia it is the famous Moscow Stock Exchange.
The most popular direction among traders is Forex trading. Most of the traders for many years earned on the difference in exchange rates. This market has the largest turnover!
Exchange - This is a kind of intermediary between the buyer and the seller. For example, you want to sell a certain product. You submit your application, it is processed on the exchange, there is a buyer, after which a deal is made.
Before you start work, you should decide on the type of exchange. Thereafter choose a brokerwho will act as an intermediary between you and the site itself. The fact is that no one will let you as an individual onto the exchange itself. Here you need start-up capital in 100 000 dollars, which not everyone can find. Yes, and the registration process is extremely complicated.
Therefore, there were brokers who enter leverage. With it, trading on the stock exchange has become much more accessible for each person, regardless of his financial situation.
Features of trading on the stock exchange via the Internet
After the broker is selected, you can start making money in the financial markets. But one thing is just to make a deal; even a schoolboy can do it. Quite another is to make a profit on a stable basis due to correct forecasts due to a competent and accurate market analysis.
Success in working on financial markets is impossible without well-defined Trade Strategy and understanding of the essence of the matter. You must learn to feel the market, not only taking into account Technical Indicatorsbut also fundamental. Any news directly affects the dynamics of prices. And if you think that having studied one indicator, you can predict the behavior of prices, then you are greatly mistaken.
Even 20-30 years ago, trading was very different from the one we are used to now. Remember the movie The Wolf of Wall Street? All about it was. Traders gathered in the same building of the stock exchange, where deals were concluded.
Now you can open transactions at the broker’s site through a laptop while sitting at home. No need to personally call your broker and ask to open an order to buy or sell a certain number of shares. All work happens in one click.
Trading has become not only more affordable, but also easy. Due to the versatility of modern trading platforms, you will be able to independently make full-fledged transactions based on market analysis. All the necessary technical indicators, graphic analysis figures, and candlestick pattern recognition are already built in.
All the necessary tools for analysis can be put on your price chart in one click. One of the best and most common trading platforms is the 4 and 5 Metatrader.
Online trading on the stock exchange via the Internet, of course, has its significant advantages. But there is also one major drawback. There are many scammers on the net. And the scope of online trading is also not spared such deceivers.
In addition to hackers who break into traders' accounts and steal their earned money, there are unscrupulous brokersthat provide incorrect quotes. All this is created to prevent traders from earning a stable income.
Only one way out - initially choose the company that meets all the criteria of quality and reliability!
This is an exchange where traders make deals with buying / selling currencies. This is part of the global market, where you can earn on the difference in exchange rates. But it is important to understand that the market itself is unpredictable and chaotic.
No professional trader and investor can make a correct forecast on 100%. At any moment something can happen that will collapse the entire market. And no technical indicators can predict this.
How many such stories have already happened when people lost billions in this market. Trading on the exchange itself is one of the most risky businesses! You must understand that it is you who are to blame for losses and losses. And not a broker, market or other traders. As a beginner, speculators usually like to say.
One of the important components of success in Forex trading is psychological and emotional stability and discipline. And of course, a trading strategy that must be followed and under no circumstances breaks the rules.
Beginners think that to succeed you need to constantly monitor graphics and sit at the computer. Far from it. Experienced traders can do the job a couple of hours a day. They just know what time of day it is best to trade.
The main participants of the Forex market (FOReign EXchange Market) are the traders themselves. The broker acts as an intermediary between the exchange itself and the trader. It is unlikely that you will be allowed to personally go to the exchange itself. And why should we have such difficulties?
To make deals with a broker, you need a trading terminal. All reliable modern brokers provide it for free after you have registered and opened an account on its platform. In most cases, trading on the Forex exchange occurs through the MetaTrader.
At the beginning, a newbie may become confused in the terminology of trading on the foreign exchange market. So let's go over the most important concepts that you have to constantly face.
- Timeframe - is the time scale on the chart for conducting market analysis in the short, medium or long term. For example, if the hourly timeframe H1 is set on the chart, then one candlestick on it is formed in 1 hour. This will allow to see the picture in the longer term. Well, and vice versa, if on the M1 chart, then each candle will be equal to 1 a minute. Regardless of your trading strategy, it is better to apply multiple timeframes to get a clearer picture of the market. After all, if in the short term, the price rises, then when switching to H1, it is clear that the main trend is downward.
- Leverage - Do not confuse with a bank loan. No broker will lend you money, as many newbies naively believe. This is a proportional ratio of the amount you invest in one transaction to the one you would like to open it for the sake of getting more profit. Naturally, the greater the leverage, the higher the potential profit. But there is also a greater risk that the market will “eat” your deposit if the price suddenly turns “not there”. Beginners should not play around with their shoulders in 1: 1000.
- Warrant - This is a deal that a trader opens.
- Lot - this is the volume of the transaction. But it is not indicated in the dollars and rubles we are used to, but in 1, 0,01, 0,001, and so on. One lot in Forex is 100 000 dollars. This is when considering that the leverage is equal to 1: 1. But few people sell such large amounts. Therefore, deals are mainly opened on 0,02, 0,01, etc. Agree, if it were not for leverage, it would be completely impossible to trade on the Forex exchange.
- Indicators - special mathematical algorithms that, based on formulas, analyze the past history of quotations, reveal their regularity and help predict future dynamics. It is on this and built the lion's share of technical analysis.
- Candlesticks - Experienced pros recommend not to be limited only to the indicator analysis. Japanese candles are also a useful tool. This is primarily a type of display graphics for the convenience of analyzing the entire picture on the market as a whole.
It is even interesting concept of bulls and bearswhich underlies all trading on the stock exchange. Bulls are buyers. When they dominate the market, the price goes up, the trend is up.
Bears are sellers. The price begins to fall when their number on the market is greater than the buyers. The trend is getting down.
But in the framework of one common theory, the bulls push their prey up (hence the uptrend), but bears, on the contrary, press down the prey (downward trend). Therefore, often in the trading forums you can hear such a thing as a bullish trend or Bear Absorption pattern.
In addition to all of the above concepts, you must understand such terms as pending orders Stop Loss, Take Profit, margin level, trend, Pivot points, consolidation and much more. This is a huge science that cannot be comprehended in a couple of days.
Quotes and currency pairs
We continue to talk about the basics of Forex trading. Transactions here are on currency pairs. This is a ratio of two different currencies. Suppose we all know what the dollar rate is. That is, how many rubles will cost 1 US dollar. This is the USD / RUB currency pair, where the dollar is the main currency and the ruble is secondary. A pair of EUR / USD shows how many dollars 1 euros will cost.
There is a group of major currency pairs. These are the most popular trading assets in Forex. It is on them that the main trading volume occurs:
- American dollar;
- Japanese yen;
- British pound;
- New Zealand, Australian and Canadian dollars;
- Swiss frank.
How to successfully trade in Forex
To get started, you need to learn all the basic fundamentals of trading as a minimum. In the future, you will still have to go into all the nuances if you want to become a professional and earn a steady income in this area.
The second step is to choose Trade Strategy. In the future, gaining experience, you can create your own trading strategy. But at first the ready template will come down. By the way, on my site you will find many proven and tested strategies that are ideal for beginners.
Choosing a strategy, enter into transactions only within its rules. In no case do not deviate from it under any circumstances. Without tactics, your trading on the stock exchange will turn into classic gambling. It's easier to go to the casino right away. There is no excitement in Forex!
Before you start trading, you need to understand two such concepts as the price of ASK and BID (sale and purchase price). ASK is the price at which the seller is willing to sell their goods. BID - according to which the buyer is ready to buy the goods. But these concepts belong to the market itself. If you translate them to our Forex, then open a deal to increase at the price of ASK, but for a fall - at the price of BID.
The difference between the purchase and sale price is called the spread. Brokers have trading conditions in this regard can vary greatly. For some, the spread is fixed, for others it is floating. There is a narrow, profitable spread and so on. In this regard, you will have to take the time to select the most suitable company for further cooperation.
Roughly speaking, when you open a trade, you automatically become in the red by the amount of the spread, which changes in points. Therefore, in order to be at least at breakeven, it is necessary that the price moves in the right direction to the very same spread value as a minimum.
At the heart of trading on the stock exchange are the classic concepts of supply and demand. Also here is the price. The more attractive the currency, the more people want to buy it. Accordingly, the price rises. And vice versa. But the price can not grow indefinitely, sooner or later the currency will not be so attractive at such an inflated price. And it will begin to sell. The price will start to fall. Well, how to predict it? This is what the broad science of market analysis is doing!
It stands for how Contracts For Difference - contracts for price difference. This is a new type of trading, which provides for earning money due to the difference between the prices of trading assets.
Earlier, traders could only earn money on Forex, but now, thanks to the development of new technologies, other financial instruments have begun to appear.
Basically, binary options brokers have such contacts, who have decided to diversify their platforms and attract traders with extensive experience and experience in the financial markets. After all, CFD is inherently very similar to the classic Forex trading. This is a kind of middle ground between Forex and binary options.
CFDs (like binary options) are over-the-counter contracts. That is, with your transactions you will not affect the trading volumes in the real currency market. All your investments remain only within the broker. You do not enter the real market. Hence the name - over-the-counter trading.
Essentially, you are trading against a broker. And when concluding a CFD transaction, you kind of enter into a contract with the broker himself, according to which he undertakes to pay you a profit amount equal to the difference between the opening and closing prices. If, of course, your prediction was correct.
As in Forex, the total profit here will depend on the number of pips that the price has passed in the right direction. There are also Ask and Bid prices, spreads, leverage and so on.
The process of opening a CFD transaction:
- First of all, the trader, on the basis of his strategy and clear market analysis, decides whether the price will rise or fall. It opens a transaction either immediately at the current price, or places a pending order (when it reaches the desired level, the transaction will automatically open itself).
- Next you need to specify the amount of investment (lot size).
- As in Forex, it is recommended to place stop loss and take profit orders.
After this transaction is considered open. As for trading strategies, they are approximately identical with those available for Forex.
CFD contracts are like a separate market with their own rules and features. This should not be confused with Forex, although their principle of making deals is very similar. These are completely different tools for making money in financial markets. Trading on the stock exchange can be varied. And each trader chooses for himself the tool that will be comfortable to him personally.
Many traders start their careers with binary options. Why? This is a kind of simplified simulator, according to which you do not bathe for what stop loss and leverage to put, how to correctly calculate the parameters of the transaction in the trader’s calculator, and also not to worry about which button to click in Metatrader to simply open an order for increase prices
Here everything is simple:
- choose a currency pair;
- set the amount of the transaction (without any obscure lots, and specifically the amount in rubles or dollars);
- expiration time (the duration of the transaction);
- and one of two buttons - Above or Below.
Everything! The deal is concluded. It remains only to wait for the date of its completion and the result. If your prediction turned out to be correct, then you will get up to 80% profit, or even more.
No, you did not hear. There is really a fixed yield, which can be equal to the whole 80% of the profit from the amount of your investment! At first glance it may seem that this is the best way to invest on the Internet. But not so simple.
No wonder binary options are compared with gambling. Everything here works on the principle of "All or nothing." If you guess with the forecast - you get 80% net earnings, no - all 100% of your investment goes to the broker.
This is also an OTC trading, respectively, you play against a broker. But it is not at all profitable for him that you are constantly in profit. This is where a bunch of sad stories emerge that the naive traders again fell for the tricks of fraud brokers. There are, unfortunately, a lot.
Therefore, you need to pay great attention to the choice of a reliable company!
Despite the fact that it is one of the youngest instruments for trading on the stock exchange, it has gained immense popularity. And all thanks to the following features:
- Ease - Unlike the same Forex, to study the platform will take just a couple of minutes. And after that you can make your first deal.
- All risks are known in advance. - even before opening a deal, you know how much profit you will get if you succeed and how much you will lose if the forecast is unsuccessful. This allows you to control your capital and distribute risks.
- Profit - it is fixed. Even if the price goes to the right side of everything on the 1 point, you still get 80% profit. Yes, sometimes it is possible to earn 200% or even 1000% profit on Forex, but for this you need to clearly predict the trend and have time to catch it at the very beginning. And then you have to wait a long time until the trend is completed. Here, in just 60 seconds, you can earn these 80% profits from famous turbo contracts.
- Turbo contracts - thanks to them, binary trading has become so popular both among beginners and pros. Especially among fans of excitement.
In fact, turbo contracts are very risky and unpredictable. None of the existing strategies are suitable for such trade. And all because of the presence of market noise, which makes the work on such short timeframes completely unpredictable.
Can I make money on this tool? Of course yes! Moreover, many pros have even switched from Forex to binary. And all because here you can really make more money and in a short time. But without a clear trading strategy, there is nothing to do here.
How to successfully trade on the exchange: options for earnings
Inexperienced newcomers are naively mistaken that trading on the stock exchange is the only option for generating income from financial markets. But this is not at all the case. It is not necessary to enter into transactions. You can make good money in other ways.
- Independent trading.
This is the most basic source of income. This is what I said almost all the current article. The trader makes a market analysis, determines the future direction of the price based on his own trading strategy. And makes a deal. If the prediction is correct, it makes a profit. Otherwise incurs losses.
But it is important to understand that losses are an important part of the work of a trader. They will always be. The most important thing for the reporting period (for example, a month) you are in the net profit.
On the Internet, you can find a lot of loud statements that you can earn on 300, and even 1000% profit every month. Do not believe it. For the most part, this is a trick from cheaters and scammers. If you follow this link, you are more likely to cram a product or “100% profitable strategy”.
Real trading income is 10-30% per month of the deposit amount. Well, how big the deposit will be, so will your monthly earnings. Therefore, it is better to calculate everything in advance.
- Trust management and PAMM accounts
If you do not know how to predict the market correctly, and in general you understand that this is not yours at all, then you can still receive passive income from trading on the same Forex market. trust management.
You give your capital to the management of a successful trader. He makes deals, but after that he gives you a part of his profit in the form of interest + your initial capital.
But not all traders are as successful as shown in their statistics. Many are aggressive trading. And your deposit can be drained in a short time. Therefore, it is necessary to carefully select the person to whom you will transfer your own money to the management. There are absolutely no guarantees that you will receive your deposit back.
This way of earning can bring hundreds of thousands of rubles a month. But it is suitable only for those who have extensive experience in trading in the markets. It lies in the fact that you will conduct teaching activities, conduct webinars, paid lessons and much more.
The higher your work experience and experience, the greater will be the cost of your services.
Trading on the stock exchange can bring big earnings. But it is necessary to approach this with all responsibility. Without knowledge and experience you will not be able to determine where the price will go. But even this complex science can be learned independently. My site has a large collection of knowledge that will help you master the market analysis from scratch!