The ultimate beginner’s guide to trading-An Pham Investment
- Pham Family Magazine
- Feb 22, 2020
- 2 min read
Technological advancements in the finance industry have lowered the entry barrier to trading. Now, anybody can start making money from the markets with a basic understanding of how the market works, decent trading capital, and the right trading tools. In fact, financial trading tools such as bots, trading algorithms, AI, and social trading makes it easier to become successful at trading without having advanced degrees or any specialized training.
Different kinds of trading
Before getting into basics, let’s go over the different kinds of trading first:
Stock trading: Stock trading is the art of buying, holding, selling stocks (also called shares) of securities listed on public stock exchanges such as NASDAQ, NYSE, and AMEX.
Forex trading: Forex trading (also known as FX trading or currency trading) is the art of buying and selling currencies in the hopes of making profits on the difference in the value of such currencies in the global economic landscape.
Options trading: Options trading is a form of derivative trading in which people trade contracts that give them the rights (but not obligation) to buy or sell an underlying asset at a predetermined price.
Binary options trading: Binary options trading is a form of trading in which traders expect to earn a predetermined payout or nothing at all (they are also called all-or-nothing options) based on the success of their ‘prediction’ of the outcome of a specific market event.
Making your first trade
Now that you have a basic understanding of how the market works, you’ll need to decide on the kind of assets or securities you want to trade. The next decision you’ll need to make is choosing the right broker or brokerage firm through which you’ll access the markets. The broker you choose will have a direct influence on the kind of securities you’ll be able to trade, the kind of trading tools you’ll have at your disposal, how much money you’ll pay in fees, and the kind of final returns you can expect on your trades.
Some unscrupulous brokers tend to make their trading process opaque, confusing, and complex as part of efforts to fleece out more fees, transaction costs, and commissions out of beginner traders. You need to find a broker that would charge relatively low fees while still providing you with a full suite of resources to make your trading experience easier.
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