What is trading, how to make real profits, and the best techniques for beginners

This article provides comprehensive knowledge about trading, effective trading methods, and strategies to achieve good returns. We will build a foundational understanding of financial markets, risks, and appropriate profit-making techniques.

What is Trading? Understanding the Basics

Trading is an activity of buying and selling financial assets to make a profit. These assets are diverse, ranging from stocks, currencies, commodities, to cryptocurrencies.

The global financial markets offer many options for traders to explore, such as stock indices like S&P 500 or FTSE 100, worldwide currencies like the US dollar and Japanese yen, or even natural commodities like oil or corn.

To get started, traders need to open an account with a trusted online trading platform. These platforms offer various financial markets, helping you predict whether prices will rise or fall.

Basic Principles of Trading

The principle of trading is to buy and sell over short periods to profit from continuous price fluctuations of assets.

However, no strategy guarantees 100% profit. But if you use analyzed and well-planned strategies, the chances of profit will definitely outweigh the risks of loss.

Essential Analysis for Trading

Economic Factor Analysis: Traders need to understand current economic trends of the invested businesses and identify influencing factors.

Industry Analysis: It is necessary to study industry trends, current market conditions, and expected growth.

Company Analysis: Internal factors, both qualitative and quantitative, must be analyzed to decide whether to invest.

Professional traders combine Fundamental Analysis (with) future trend forecasting and probability studies.

5 Important Things Before Starting to Trade

1. Explore Your Reasons: Why do you want to trade? To find suitable patterns and methods, whether for long-term savings or additional income during work.

2. Study Information Thoroughly: Trading involves capital; you must have sufficient knowledge and understanding beforehand.

3. Learn Trading Terminology: There are many trading terms to study to trade smoothly.

4. Manage Risks: Set agreements with yourself on how much loss you can handle to reduce risks.

5. Choose a Reliable Platform: Select a trading platform with trustworthiness, reasonable fees, and good customer service.

Choosing a Trading Platform

When selecting a trading website, consider factors such as user-friendly design, reasonable fees, and language support.

It is crucial to study the terms carefully, know the fee structure, and verify whether the platform is regulated by authorized agencies.

A good platform should offer a wide range of assets, from cryptocurrencies, stocks, CFD indices, to Forex and other assets.

Types of Trading Available

Stock Trading

Stock trading involves buying and selling shares of companies listed on stock exchanges. To trade stocks, you need to open an account with a securities company.

Securities firms handle trading orders, send them to the stock exchange system for matching, facilitate payment, and deposit stocks into your account.

Can it really make a profit? Yes. Historical returns from stock investments have been better than other methods. Although the stock market is volatile, in the long run, it tends to rise higher.

Additionally, good companies also pay dividends to shareholders, making stocks a way to accumulate wealth and pass it on to future generations.

Cryptocurrency Trading

Cryptocurrency (Cryptocurrency) is a digital currency, an encrypted asset without a physical form, created to serve as a medium of exchange.

The popular method of trading cryptocurrencies is Scalping, a short-term trading strategy that captures small price movements and quickly sells for profit within minutes or seconds.

This strategy requires high concentration and may involve opening dozens or hundreds of positions simultaneously to increase profit chances, analyzing short-term charts such as 1-5 minutes.

Forex Trading

Forex (Foreign Exchange) involves exchanging foreign currencies, with prices fluctuating based on supply and demand.

Forex is the largest financial market in the world, operating 24 hours a day except on holidays. It requires low capital investment but can generate high profits with leverage.

However, leverage also increases the risk of significant losses.

Popular Forex currency pairs include:

• EUR/USD (Euro – US Dollar)
• USD/JPY (US Dollar – Japanese Yen)
• GBP/USD (British Pound – US Dollar)
• AUD/USD (Australian Dollar – US Dollar)
• USD/CHF (US Dollar – Swiss Franc)

CFD Trading

CFD (Contract for Difference) is a contract to buy or sell the difference in price, suitable for short-term trading.

With CFDs, you do not need to own the actual asset but can profit as if you do. Traders can profit from both rising and falling markets.

However, CFD trading carries high risks. Proper study and practice are essential before real investing.

Gold Trading

Gold is a widely traded commodity in global financial markets due to its low volatility and safety.

Investors can trade gold via online platforms without physically holding gold.

The popular method is using CFDs to profit as if owning real gold, without tying up large amounts of capital.

3 Main Trading Strategies

1. Day Trading: Short-term profit

What is it? Buying and selling assets within a single day. This strategy is popular in stock and crypto trading. Traders buy and sell multiple times.

Advantages

• Generate profit within the same day
• High trading volume
• Multiple profit opportunities daily
• No need to monitor the portfolio all day

Disadvantages

• High volatility
• High transaction costs
• Requires experience to plan for high profits
• Can result in immediate losses within the day

2. Long-Term Trading: Long-term profit

What is it? A method that offers good and safe returns, different from short-term trading. Traders need to understand the market from a broader perspective.

Advantages

• Less stress, no need to monitor charts constantly
• Greater profit potential, no need for quick withdrawals
• Can work full-time and trade simultaneously
• Reduces risk

Disadvantages

• Not suitable for impatient people
• Requires extensive knowledge of economic factors
• Continuous monitoring of economic news and factors

3. Swing Trading: Mid-term profit

What is it? Trading aimed at medium-term gains, holding positions for several days to weeks. Price differences can be much larger than Day Trading.

Advantages

• Less screen time than Day Trading
• Suitable for those with full-time jobs or limited time
• Lower transaction costs due to fewer trades

Disadvantages

• Requires significant time to monitor markets
• High concentration and discipline needed
• Total costs may be higher due to frequent trading
• Not suitable for full-time traders

How to Succeed in Trading

1. Continuous Learning

Read articles, trading methods, and strategies from reputable sources. If budget allows, buy books on trading for study.

2. Practice Regularly

Practice improves experience. Use a free demo account (Demo Account) with virtual money to test strategies before real trading.

3. Avoid Emotions

Trading must avoid greed and emotional decisions. Consider other factors and comprehensive analysis.

4. Consistency

No trader makes profits every day. Often, there are losses today but profits tomorrow. Use “cold” money and control risks.

5. Choose the Right Platform

Select a trustworthy platform with regulatory oversight, good customer service, and fair fees.

Summary: What is Trading and Can It Really Make Profits?

Trading offers various ways to profit, but traders must continually study and expand their knowledge because asset prices depend on global events.

The chosen method depends on personality, risk tolerance, and investment goals. Understanding the risks and returns of each method is essential.

Frequently Asked Questions

What methods can I trade with?

You can trade through products like CFDs, which allow speculation on price increases or decreases. You need to open positions using margin (Leverage), which increases risk because profits and losses depend on the total position size, not just the deposit.

This is why risk management is crucial in trading.

What is the purpose of trading?

Trading involves frequent transactions such as stocks, commodities, currency pairs, or other securities. The goal is to generate returns exceeding long-term buy-and-hold investments.

While investors may be satisfied with 10-15% annual returns, traders often seek 10% monthly profits or more.