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Old 26-12-2017, 04:05
FXBtrading FXBtrading is offline
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A step-by-step guide on how to start trading

Trading can be an exciting way to earn an additional income. However, before you start trading you need to learn a few things. Knowing what to expect, what tools you need, and a few techniques will help prepare you so your entry into trading is as smooth as possible. The following things need to be considered before you start trading:

1. Getting to know the market

Traders can trade within many different markets which include the stock market, forex market, options market, and Contract for Difference (CFD) markets.

The stock market involves buying/selling shares of a company. The forex market is the largest market in the world and involves the exchange of one currency for another. The options market allows participants to undertake positions in the derivative of an asset, so the option is not ownership of an underlying asset. The contract for difference (CFD) market allows traders to speculate on the rising or falling prices of instruments such as currencies, shares, indices, and commodities.

When a market is moving downwards, it’s called a bear market. You can take advantage of this through ’short selling’ which involves selling assets or (derivative) you do not own in the hope of buying them back at a lower price in the future. The difference is your profit.

Short selling can be very risky as your losses are unlimited and you could lose more money than you actually have in your trading account. This is because the shares could rise so you would have to cover the difference. Therefore, short selling is not advisable for novice traders.

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