One of the best ways to make money while working completely for yourself is through trading. The internet has made real time trading and investing easy and much cheaper than ever before, and using this to help yourself make more money is a great idea for many individuals–especially those that want to take control of their own futures.
Trading Isn’t Easy
Just because trading is a great way to make money does not mean that it’s an easy way to make money. It is time intensive and there is a long and slow learning curve. Odds are, you will make many mistakes when you start out, and this inevitably means lost money. Your mission–when first starting out–is to reduce this damage as much as possible. If you are able to keep more money in the market longer, you will eventually be able to turn it into more cash. But when you’re beginning, this can sometimes be difficult, especially if you let your emotions get involved. Practicing is the best way to get practice with little to no risk. Some brokerage sites have demo accounts that allow you to trade in real time with their actual software at no cost since you are using fake money to practice. This is a great way to help you learn the ropes and the dynamic relationships between indicators and actual asset price movement, and it is all done without risking your own cash.
Regardless of how much you deposit into your trading account, you will want to start small. Starting small is the logical next step since now that you’ve moved on to real money, you will likely have a new set of bumps in the road: namely, nerves. Risking money can make you nervous, and if your nerves get involved, you stand a higher chance of making mistakes. It’s impossible to reduce this to zero simply because of the fact that we are human, but we want to get as close to this as possible. Starting small and working our way up helps us to accomplish this by teaching us that money is merely a tool that we need to create wealth for ourselves. It also helps reduce the risk of losing money that you might need for living costs.
So Many Choices
There are many different types of trading. You can trade currencies in the Forex market, you can trade company stocks and the indices that measure them in most major countries, you can trade commodities in a few different ways, too. Furthermore, there are different ways of trading these individual assets. There is the traditional way, there are options, binary options, future contracts, and a few other minor types of trading. Each method has advantages and disadvantages, and not each one will be equally beneficial to everyone. There are a lot of things to consider, especially where your knowledge lies, how much money you want to risk total and per trade, and how patient you are. Some trades are more time sensitive than others, ranging from a few seconds to up to a year.
Traditionally speaking, there are three main types of active trading: day trading, swing trading, and position trading. Day traders hardly ever keep a position open at the end of the day, whereas swing traders will sometimes keep a trade open for a week or two. Position traders can keep a position open for several months, but once you move past this, you are no longer trading, but investing. Investing implies a more passive approach, and as a general rule, the profit rate will be a bit lower with investing. It is trading that we want to focus on since there is much more potential for making money.
In the past, day traders were relegated to the stock market, but today, there are many ways to overcome this. Day trading stocks is expensive–the U.S. governing bodies require a minimum of $25,000 to be in your brokerage margin account at any one time if you are labeled as a pattern day trader. But, if you focus on the Forex market or binary options, you can still be an effective day trader with even less than $1,000 in your account if you’re smart about it.
Lots of Perks
The biggest reward when it comes to being an active trader is the fact that you are putting yourself several steps closer to becoming independent. People with analytical minds often succeed here, but were not particularly successful in other careers. Becoming a top level professional trader can allow you to leave a job you hate and focus on the things you really enjoy. It might take many years to get to this point, but it is possible with dedication and study. It’s a long learning process, but it can help you achieve your financial dreams faster when done correctly.
Is trading for you? Maybe. The only way to find out is to try it for yourself. There are so many branches to choose from that you will want to match up what you do with what you know best in order to give yourself a tiny advantage, but it can be a very fun way to earn money on your own. Making money is never a bad thing, and the more your practice, the better you will get at doing so.