Stock market investing: what is trading?
Investing in the stock market is no longer an activity attributed to professionals. With the development of markets, investment in the stock market is more and more accessible. People are thus more inclined to obtain successful shares in new online activities And the rise of the internet only arouses the curiosity of more than one. Thus, with such democratization, trading is on the rise with many savers. But this English term remains vague for some people. Here are some points that should help you.
Concretely what is trading?
This English term is the most used for its aesthetic side. Literally, trading means in French “the negotiation of financial assets. Trading is in a way activity in itself. This is called trader.
It mainly consists of buying and selling securities on stock markets. For these activities, the person goes through an intermediary who is the stockbroker. With the advancement of technology, trading is increasingly done online.
The goal is then quite simple to make an order to buy or sell. If the trader previously occupied a specific place, it is now dematerialized. Today's trader is free because he can self-titrate to his account.
We are then far from the physical stock exchanges where traders were permanent employees in stock exchange institutions.
The role of the trader
While anyone can comment on this, the trader can also be a professional in this area. Being a financial operator, he is called upon to generate intermediation gains on all operations while avoiding risks as much as possible.
Its main objective is thus to manage risks, if any, by adopting a good position in the market. Said position will not be determined in time and can be taken on the initiative of a client. There are different market operators depending on the segments present in the financial market.
Here is a concrete example: a trader is contacted by a client wishing to sell his shares in a company. Based on the trend and its liquidity, the trader offers a price to his client. Once the shares are bought, he takes a long position while analyzing the possible risks.
He then determines an exit point, making sure to generate a capital gain on the resale. But more than that, the trader must mobilize the following strategies: good stock selection, mastery of high-frequency statistical arbitrage, implementation of quantitative trading, take advantage of developments in the global economy, investment in emerging markets.
Who can access trading?
In theory, trading is accessible to anyone. However, it is necessary to have some skills to carry out this activity:
- Abac + 5 training in financial mathematics is the most recommended
- Good resistance to stress because trading imposes changing realities at all times.
- The person will then have to adapt easily to the situation while being bold in decision-making.
- A strong analytical capacity in relation to the data that scrolls.
The remuneration of a trader is variable. The start for a beginner is often 3,000 euros, without counting bonuses of up to 242,000 euros per year. But with more increased abilities, more pronounced skills, and experiences, a person can earn millions in just one year. And the bonus can reach hundreds of millions of dollars depending on the person's experience.
How trading works
Trading seems simple but you need at least to have complete equipment in order to do it without problems. In the current context, new technologies are imperative: computer, smartphone or tablet.
For the activity, you must also have an internet connection and a stockbroker (since it is the specialist who will guide you). Finally, the last essential is a trading platform. By going through a reliable platform, the person will be able to easily open an account with the help of a stockbroker.
The trader is led to choose financial markets. This then forces him to determine what style of trading the person wants to practice (or that it is advisable that he should practice). The first point that the trader must take into account the duration of the investments: is it short or long term? If the person opts for long-term trading, it is called swing rading. His goal is then to keep positions for several months or years. If the person opts for short-term trading it is day trading or intraday trading. In this case, the positions will only be opened for a few minutes during a single session