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The Basics

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The Basics: what? how? why?

Before getting into trading, a newcomer might have an overwhelming amount of questions as to what, why, how trading actually is. Sometimes, it becomes nearly impossible to get the right answers from friends or family, as they don’t know themselves and people typically are afraid, or at least are skeptical of what they don’t understand. Likewise, while trying to find the answers on the world-wide web, one can easily sink in the heaps of information with the answers representing one of the two extremes: either too good or too bad to be true. Here we will try to give the basic understanding of what trading really is and what one can expect when start trading.

First of all, it is important to understand the difference between trading and investment. Investment is typically understood as a process of committing financially into a project or an asset, which would yield some sort of income or increase in the value. When talking about investment in financial markets, it usually implies assets like company shares that pay dividends or are likely to be capitalized in the price. Such opportunities usually take a long period of time to be financially considerable (hence, the term ‘long’ appeared) and that is where trading comes from.

Trading, as opposed to investment, is rather a process of seeking a speculative advantage, usually in shorter period of time and involves actively managing funds. Since trading assumes active management, it allows a much faster turnover, therefore a much higher profit in the same time, as passive investment. Moreover, trading allows to quickly and easily change from one type of asset to another, therefore choosing the most beneficial one. Trading also allows one to ‘short’ positions, not only safeguarding one in the process of the asset’s price decrease, but also allowing to profit from such a situation. On the contrary, a passive investment might not yield as much, or even result in a loss, if the price of an asset decreases over time. This is one of the main reasons why trading has become a more reliable tool for many classic investors, who now seek some sort of active asset management, as opposed to just long-term investment.

How exactly does trading happen? Before internet technology was readily available for anyone, most of trading took place at the exchanges, with the New York Stock Exchange being the front cover of financial markets all together. Nowadays, less and less trades take places physically at the exchanges, as now more robust and convenient online trading platforms are usually involved. This not only allows one to mitigate numerous paper work procedures and lengthy trips, but also allows one to earn on financial markets regardless of time, location and other personal factors.

So how to start? Firstly, it is important to understand that before committing to trading, one needs to understand the associated risks, since the results of trading are exclusively related to one’s decisions. Therefore, it is important to treat trading as a tool for making profit, rather than an unpredictable gamble, yet some knowledge is the key to success. Luckily, we encourage traders to learn and adopt trading strategies for lucrative outcome. Our tuition is well structured and is able to help a beginner start and also take an experienced trader to a new level. Our specialists have vast experience and deep understanding of the financial market principles and will happily share their knowledge.

Once you have at least the bases covered, you can simply register an account, filling out and providing the necessary information, our members of staff will verify the documentation. This will allow you to make your deposit to the account and after downloading the trading platform, you are able to start earning on financial markets and build your own portfolio!