Trading: what is it and what are the different types of trading?
THAT tradeit is an activity that involves purchase and sale of financial assets. In English “trade” simply means “exchange”. In common parlance, trading is betting on the movement of an asset such as foreign currency (Forex), company shares, commodities, indices, etc.
Trade is one form of investment. The trader places capital on a platform which allows him to open positions on prices.
“To open a position” means to position yourself at a time T on the price of an asset in the direction of selling if you believe that the value of the asset will decrease, or to buy if you believe that that the value of the asset will decrease the asset value will increase.
It exists different types of trade and all aim to make a profit with start-up capital. For example, buying a certain amount of Bitcoins today and selling them a week later is a form of trading. And it doesn’t matter if the resale price is higher or lower to the purchase price.
The difference between the types of trading is how long the trader holds their position. Here are the 3 different types of trading:
- THAT scalpers : very short duration
- THAT day trading : short duration
- THAT swing trading : medium/long duration
THAT scalpers is the most aggressive and dangerous trading method. It consists of open and closed positions on very very short durations (between a few seconds and a few minutes).
The trader takes a very short reference time on his chart and will generally use leverage to increase the impact of price movements.
Leverage effects in trade
Leverage is a widely used tool in trading. It serves to multiply the movement of the value of an asset and make it significant. On very short trades, traders hope for a rise or fall that appears insignificant without the use of leverage. Gearing remains dangerous because while it multiplies the speed and magnitude of the gain, it does the same in the other direction.
Scalping is one dangerous trade for beginners and which requires a great deal of theoretical mastery before it can be considered.
THAT day trading is probably the most used technique with “traditional” traders. It consists of taking positions that last between several hours and several days.
This type of trade is more slowly and generally less risky than scalping. It allows one more grounded analysis and the depth of the market.
Since it can last several hours or even several days, the trader cannot stay ahead of the price charts at all times. For this reason, they use Stop loss and take profit.
Stop Loss and Take Profit in trading are tools used to target profit and loss. These are “limits” placed by the trader, which close the position if the loss reaches a certain stage, and the same for the gain. These tools are important because they limit the risk of loss.
THAT swing trading is a fairly long-term technique. In general, trades can last several days, weeks or even years. Generally, swing trading will be done more towards buying because the trader believes that the value of an asset will continue to rise in the long term.
Crypto investors are mostly swingers. They buy tokens because they believe in the project, and they do its value will increase over the next few months.
Why go into trading? (or not)
THAT trade was previously reserved for a very small part of the population. Since democratization and the massive use of the Internet, commerce has taken a turn. His fame has increased significantly and many people began to act.
On social networks, for example, many traders share their tips, their teachings and their methods. Trading on Telegram is very popular and there are many channels covering the topic.
Trading is a very interesting practice and an investment that can prove interesting. L’theoretical learning of trading will give you real logical knowledge.
From an investment point of view, trading is interesting because it represents the very essence of investing: create money with money.
Anyone can start trading, regardless of their capital and knowledge, this constitutes an undeniable advantage of this practice.
THAT theoretical knowledge are very important to start trading, but the internet is now full of resources for learn easily and quickly.
Trading is an interesting investment for people who are aware of the risks involved in the practice. Like any investment, risk of loss, partial or total, exist and are unavoidable. The investor must be aware of this and know that he can lose his capital at any time.
This type of investment is interesting for adults (mandatory) who have the desire to take the time to learn and have capital to invest.
In the age of the Internet, anyone with a connection has an almost infinite array of resources. Many pages, such as InvestXshare lots of fun resources to teach beginners how to trade.
There are also many people on social networks who offer support to help beginners get started.
However, always be careful of scams! Read our article “Avoid Trading Scams” to find out more.
For our part, in addition to providing hundreds of articles on our site that can help you get started and to understand trading little by little, we have developed a mobile application exclusively dedicated to trading.
This app is free and you can download on Apple or Android by typing “investx” into your phone’s marketplace.
Our app contains dozens of content and tutorials to learn trading from A to Z. We also have a team of experts who can help you if you need it.
Which platforms allow you to trade?
To start trading, there is specialized online platforms. Access to trading is very easy today thanks to the Internet and dozens of companies that allow you to do intermediary between traders and markets.
These actors are called brokers or brokers and offer contracts with difference (CFD). The contract is what the trader actually buys when he opens a trade. If he places himself on one active upon purchasehe will buy a contract from the broker, which specifies that he is betting on the increase in the price of the asset.
If the price movement increases and he closes his trade with a profit, the broker pays him the profit. These brokers are paid via various fees such as spreads, inactivity fees, overweek fees, etc.
There are many commercial brokers in France, here are some of them:
Our opinion on trading
At InvestX we love investment, financing and trade. Our team is expert in trading forex and other markets. We believe that trade constitutes a very good form of investment if done rigorously and with knowledge of the facts.
We do not recommend trading at any price. If you don’t want to learn and you have a little capital that you can’t risk losing, it’s better you don’t get started.
On the other hand, if you are eager to learn a new skill and aware of the risks, we will be happy to accompany you in this new adventure!
However, always be careful what you hear. There is many myths and beliefs about trade. This is not a type of investment where you can win every time. It simply does not exist.
Trading involves risk and you don’t want that become rich with a capital of €200 in 1 month. On the other hand, trading with good management of your capital and good knowledge can be a profitable investment.