Trading - Andrew Baxter

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The process of buying and selling of financial instruments on an online trading platform is called trading. It is different from investing as trading involved active participation in the market while investing consists of buying the securities and holding them for a long period before selling them.
  
Types of Trading

•    Based on the type of securities: Traders can buy and sell a variety of financial instruments, including stocks, bonds, options, futures, ETFs, commodities, and foreign exchange. Thus, trading can be classified based on the securities traded by the traders.



•    Based on Trading Strategies: Traders can pursue either fundamental trading or technical trading. Fundamental trading involves focusing on events specific to a company to determine whether to buy or sell the stock of the company. It is generally used to make long-term trading decisions. On the other hand, technical trading consists of studying price patterns, trends, and charts to determine future price movements. Technical trading is usually beneficial for making short-term trading judgements.



•    Based on trading duration: Duration of holding the securities plays a significant role in trading. Day trading involves buying and selling the financial instruments within the same trading day, without holding positions overnight, while position trading comprises holding positions for days, weeks, or even months. Additionally, swing trading consists of capturing short-term price movements in the securities, but the time horizon can be more than a day.

What Does it Take for Efficient and Successful Trading


Trading is a challenging profession that calls for a perfect balance of a lot of confidence, strong and quick decision-making skills, focus, skills, knowledge, and experience. The basic requirements for being a successful and consistent trader are discussed.



•    Managing risks: Risk management forms the basis of trading. Traders must know their risk-taking abilities and stay within their limits. Recklessness and undue risks can result in sweeping away the entire capital in a single wrong trade.



•    Emotional discipline: It is the key to successful trading. Traders must be able to keep all their emotions away, including fear and greed, while trading. The losses from the previous day must not make the traders too conscious and less risk-taking, while the previous profits must not make traders overambitious and adventurous.



•    Ability to learn and keep learning: Learning is what differentiates successful traders from unsuccessful ones. Traders with the know-it-all attitude fail to survive for a long time and end up making massive losses. Traders must keep learning and updating their information to stay current with market trends and technology. They can refer to various online trading courses and trading workshops to sharpen their knowledge and evolve as consistent traders.

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