Trading has been around for a long time. It’s dated back to the beginning of time where people would trade their crops with other tribes in order to get items they couldn’t produce themselves. The history of trading takes us all the way back to the 14th century, where Venetian moneylenders began to sell debt issues to other lenders and to individual investors.
Cut to the modern-day, and trading has become a career that many people turn to in order to make the most money possible. There are a lot of different types of trading, and they all have their own risks and benefits. In this article, we’re going to talk about everything you need to know about trading as a career so you can decide if trading is right for you.
What Are The Methods of Trading?
Trading can be done through many different methods. The major types of trading are day traders, swing traders, and position traders.
- Day Trading deals with short-term trades over the course of one day at most, making it a high-risk method of trading. However, this also makes day trading the method with the most profit potential, especially if you become a funded day trader.
- Swing Trading takes place over a few days at most. You can do this by buying or selling a security and earning a profit from the price changing within a few days.
- Position Trading is where you buy, hold, and sell securities for more than one month at a time. These methods have the lowest amount of risk compared to the other types of trading because you’re holding onto your securities instead of buying and selling them frequently.
There are also many different styles and strategies you can utilise when trading as a career, and they all depend on the type of stock you’re buying. These include: news trading, end-of-day trading, trend trading — the list goes on.
The Technical Side of Trading
The technical side of trading is what really drives your career. Technical analysis is how you do your research for trading stocks. You use charts, graphs, and other analysis tools to predict what will happen with the stock market. Technical analysis is one of the most important aspects of trading because it helps you decide what to buy and sell.
There are different kinds of technical analysts. There’s a market technician, who looks at charts and graphs in order to predict what will happen next with the stock market; an investor, who looks for stocks that have growth potential and analyzes the company to see if there are any signs of coming growth; and a fundamental analyst, who researches the financial statements in order to find out what’s going on with the company.
Ensure your technical market research is up to scratch and you understand the basics of trading — like the difference between a bullish and bearish market, for example.
Potential Risks of Trading as a Career
A lot of people don’t realize how much energy goes into trading. It’s not as easy as it sounds because you’re putting your money on the line. You have to be careful with what you’re doing, and do your research to avoid the potential risks.
There’s market risk, which is how much money you can lose in one day; liquidity risk (or gap risk), which is when the markets open up and affect you because there are no buyers or sellers during that time; security risk, which is the risk of your stock failing; funding risk, which is how much money you can lose due to borrowing; and operational risk, which is how much money you can lose because of mistakes made by yourself.
Make sure you’re aware of your risks and have employed a range of risk management strategies to avoid any potential financial damage.
Benefits of Trading as a Career
Trading is a career that can be difficult, but it can also be incredibly rewarding if you do well with it! People choose a trading career for many different reasons. One of the main reasons is because trading can be taught easily and does not require years of studying to get started. For example, say you have been interested in this line of work but did not know where to start or how to get into it. You would take a course online, invest a little time and money initially, begin to read books on trading and it will not take you five years to become a professional.
Another big reason traders choose this as their career is because they know that although there is no guarantee of success or riches, the probability for success in trading is much higher than other careers — such as conventional banking or becoming a professional athlete!
Trading as a career also offers both freedom and flexibility. Due to its high pay, you can work as much or as little as you want as well as set your own schedule. In fact, most people trade from home so they can be with their families. If you asked for recommendations for entry-level jobs we’re sure stockbrokers would be at the top of the list.
Start Your Career As a Trader Today!
Now that you know the basics of what trading is, how much time and effort it takes, as well as the different aspects of trading such as technical analysis and types of traders, it’s time to get started. Why not take the first steps to start your career as a trader today?