Is it possible to make a career out of trading?

Nowadays, there are various investment opportunities that people can explore, in order to maximize their profits or secure additional funds for other long-term goals. It goes without saying that the stock exchange market is the most popular destination for both experienced investors and newcomers alike. The main reason is that the stock market is quite stable and highly regulated trading platform.

In addition, it’s also rarely volatile but it does heavily rely on the global economic and geopolitical stability. Many people avoided investing as a form of a career because up until recently, the stock market was considered a barrier-to-entry area. In other words, there were difficult obstacles standing in the way and preventing competitors from entering an industry with ease.

However, modern technology and modern solutions have reshaped even the trade industry, making this area easily accessible to anyone willing to commit to trading regardless of their initial capital. To put things into perspective, it’s possible to make a living from trading but it’s never as easy as it may seem. Therefore, here are a few things you should know if you decide to make a career out of trading.

What does stock trade mean?

As you may already know, investing in stock means buying a small percentage, also called a share of a company which includes all of their equity and assets. The price of stocks is determined by a company’s overall performance on the market. The main reason companies offer their shares on the market is to raise money and spread the risk of ownership to a group of shareholders.

Now, when you acquire shares of a company you are considered a shareholder. You can sell your shares if the price suits you or buy more if the price is low. Moreover, you can hold on to your stocks and enjoy a dividend income. Nowadays, anyone can buy and sell stocks, as long as they have the initial capital. Furthermore, you can engage in trading even if you have a family at home you must commit to. Strategies, such as day trading can be adjusted to your personal life.

What’s required for stock trade?

Aside from capital, you’ll need to sign up with a broker, in order to start trading, unless, of course, you want to become a broker yourself. A broker will buy or sell assets on the behalf of a client or a company that employed them. A broker must also perform analysis on investments, in order to secure a deal that will suit their client’s needs. On the other hand, you can become an independent trader and focus your investment solely on personal gains.

However, in order to become a successful trader, you have to understand well how the market operates and what’s involved. Moreover, you have to be able to devise good strategies on the go and ensure you don’t lose your investment. The fact of the matter is that there are always risks involved when it comes to trade. A good trader knows how to minimize, as well as mitigate those risks.

Identify good opportunities

The key to successful trading lies in spotting a good opportunity and capitalizing on it. It sounds much easier than it actually is, to be frank. There are a lot of companies on the stock market and not every one of them is bound to ensure long-term success. The fact of the matter is that you cannot predict how a company will perform, you can only estimate their performance at best.

However, jumping on the opportunity, while it’s still good has a good chance of yielding a return on investment (ROI). In order to achieve that, you must familiarize yourself with the market and conduct constant research. That way you’ll also familiarize yourself with the use and the demand for resources, as well as be able to spot companies with good growth potential.

Even the most specialized industries are looking towards the future by implementing technology and digital opportunities for its customers, resulting in long term success and a good investment opportunity. As an example, a division of Schlumberger Technology Corporation called Hexacom launched an e-commerce platform last year where oilfield professionals can get everything from tubulars to drill collars.

In any event, opting for a good opportunity will depend on your investment goals, such as short-term, mid-term or long-term goals.

Portfolio diversification

As you’re probably aware by now, any type of trade has risks involved. Becoming a good investor means learning to be flexible around those risks. That’s why many experienced investors always diversify their investment portfolio. Diversification means investing in other opportunities, instead of focusing on a single one. If you’ve made profits from stock investments, you can consider investing in other methods as well. For instance, you can invest in mutual funds, ETFs, bonds and so on.

Also, you can consider alternative investment types, such as precious metals, real estate, antiques etc. The purpose of this strategy is to secure your wealth, as well as minimize the risk of your investments. In other words, if you have multiple investments at once you can easily recover if your stock deal, for example, doesn’t turn out as expected. Simply put, investment portfolio diversification is there to ensure you don’t lose all of your money on a single investment deal that went bad.

Forex market (FX)

Another market aside from stocks, you can explore is the foreign exchange market or Forex. FX is similar to the stock market but FX deals in currencies. That being said, over 4 trillion dollars worth of currencies are traded on the market each day. That makes the Forex market one of the most liquid trading platforms in the world. Currencies are traded in pairs and there are a lot of strategies to explore that can get help you turn a quick profit.

However, 96% of new traders fail at their first attempt at currency trade. The main reason is that the FX market is primarily designed for insiders who understand the market trends well. Still, if you lack the experience in trading currencies, you don’t have to start risking your own money straight away. As a matter of fact, you can create a demo account and try out different strategies with virtual money but in real-time scenarios. That way you can build up experience until you’re comfortable enough to trade with real money.

Cryptocurrencies

Another form of trade worth exploring is cryptocurrencies. This trend has grown in popularity ever since the first cryptocurrency Bitcoin had emerged back in 2009. Ever since then, there’s been a huge development in the crypto market that now favors over a thousand different offerings, whether in coins or in tokens. The purpose behind cryptocurrencies was to create a trading platform that’s independent of any government imposed regulations and without the middleman like central banks.

That’s why the technology behind cryptocurrencies also known as blockchain was developed to act as a decentralized publicly edger that will record peer-to-peer transactions. However, the fact that it’s unregulated makes the crypto market a very high-risk market. Extreme volatility and instability may prove to be too risky for investors. If you’re new to the whole trading concept, you might consider less risky options before you move to cryptocurrencies. The main reason is that in time, the crypto market will undoubtedly stabilize. But until then, the crypto market is reserved for the bold.

 

Trading in assets and making investments can be a great opportunity to maximize profits and gain a significant ROI. To answer the question at hand, it is very much possible to make a career out of trade alone. However, don’t leave your day job until you learn the ropes first. Needless to say, with careful research and good planning, you can make your investments worthwhile.

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