Financial Trading, what is and how to start
Published: January 27, 2021 by Andrew
Financial Trading is a speculative investment that consists of buying or selling financial stocks to make a high profit with minimal risk.
Today everyone can do financial trading because the platforms that allow access to the market are really simple to use and allow you to start with very low capital.
In this practical guide, we explain in detail what financial trading is and how to get the best results even if you really start from scratch.
Furthermore, we review the best financial trading platforms, the only ones that are truly recommended for beginners who do not want to make mistakes.
An example? We will talk about the famous eToro platform, highly appreciated by beginners because it allows you to do financial trading by automatically copying the best investors in the world.
In this way, even those who do not know anything about trading can get the same results as the best professionals, from the first day of activity. Furthermore, eToro is a truly valuable resource for anyone who wants to learn trading.You can sign up for free on eToro by clicking here
How Financial Trading works
Everyone has an intuitive idea of how financial trading works: in general, it is thought to consist of Buying Stocks (or other assets) when the price is low and then reselling them when the price increases, making a profit.
This is certainly an intuitive system for doing financial trading but there is also another possibility: short selling.
This is a purely speculative operation which consists in selling a stock that you do not own to generate a profit when the price falls.
It is not important to immediately delve into the technical aspects of this operation, also because those who start and choose a good trading platform do not need to know the details.
What is really important is to know that you can earn both when the price of an asset rises and when it falls.
This may not be intuitive for some beginners but understanding this simple concept can open up huge opportunities for profit.
To do financial trading, therefore, you must follow the following steps:
- Choose a safe, easy-to-use, commission-free platform
- Open a free trading account
- Deciding which market to operate on
- Choose and elaborate a forecast: will it go up or down?
- Buy or sell short based on the forecast on the stock
It is not at all difficult to start trading financial: in practice, you have to make predictions on the markets and then buy or sell based on the forecast.
We will talk about techniques for making predictions later but we already know that with eToro it is not necessary to make predictions, you can simply copy the operations made by the best investors.
Read More: Short Selling
Best Financial Trading Platforms
One of the most important factors in achieving success with financial trading is the choice of platform.
In fact, the trading platform keeps the investor’s money in a protected account (trading account) and follows his instructions to carry out the purchase or sale operations.
We can say that in most cases the difference between the investors who start and are immediately successful and those who lose money lies in the choice of the trading platform.
We recommend that you always use secure, reliable, commission-free and easy-to-use platforms.
To help novice traders, we list some of the best financial trading platforms out there below:
Min. Deposit: 50€
Min. Deposit: 100€
Min. Deposit: 10€
Min. Deposit: 250€
Min. Deposit: 100€
Min. Deposit: 250€
eToro is one of the most used and appreciated financial trading platforms in Europe and throughout the world.
It is an extremely intuitive platform, without commissions and without costs, safe and reliable. However, there is a single advantage of eToro that has made it the preferred platform for beginners worldwide: the ability to copy, in a completely automatic way, what the best traders in the world do.
Thanks to the innovative Copytrader software, it is possible to identify the investors who in the past have achieved the best results with the lowest risk.
The user can view valid data on the operations of these traders (preferred market, risk appetite) and can then decide which investors to copy.
After selection, the eToro software will carry out the operations of the user, copying all the operations made by expert traders in a precise and real-time way.
In this way, the user obtains exactly the same returns as the trader he is copying (and the best in the world can be copied). Furthermore, eToro allows you to learn financial trading by watching live what the best are doing.You can sign up for free on eToro by clicking here
ForexTB is the other great opportunity for those who want to start financial trading from scratch and do not want to make mistakes.
What are the advantages of ForexTB? First of all, it is a safe, reliable and completely free trading platform. The platform is also famous for being one of the easiest and most intuitive.
All subscribers are followed on the phone by a real trading expert who literally guides them step by step.
Those who want to learn more have the opportunity to download one of the best financial trading courses available on the market for free.
The ForexTB course, in fact, quickly became a best seller, with hundreds of thousands of downloads throughout Europe with a great success.
Why? First of all, it is a completely free course while other courses are paid (and have very high costs).
Furthermore, it is a course that explains financial trading in really simple words, understandable even to beginners who are approaching this world for the first time. The paid courses, unfortunately, are often incomprehensible to beginners because they are too technical.
Finally, it is a very practice-oriented course while many paid courses are full of useless theory.You can download the ForexTB course for free by clicking here
The benefits of ForexTB aren’t over yet. All members, for example, have access to a demo account, particularly useful for those who want to do trading experiments without risking anything.You can sign up for free on ForexTB by clicking here
Learn Financial Trading with Books
What are the best trading books? The ForexTB ebook we talked about in the previous paragraph is perhaps one of the best books available today for those who want to learn financial trading well.
We are talking above all about the practical part: how to make a profit starting from a few initial knowledge and from a limited capital (usually 250 euros are enough).
To start, from a technical point of view, the ForexTB book is more than enough. For those who want to acquire a winning mindset, suitable for a career as a professional financial trader, we suggest reading “Think and grow rich” by Napoleon Hill. It can be found on Amazon for a few euros.
Although this is a book that does not talk directly about financial trading, it explains how to achieve your profit goals by changing your mindset.
For those wishing to deepen the technical aspects of trading, we can recommend:
- Technical analysis of the financial markets (John Murphy)
- The Warren Buffet Way (Robert G. Hagstrom)
- Market Wizards (Jack Schwager)
- The intelligent investor (Benjamin Graham)
- The Alchemy of Finance (George Soros)
Is Financial Trading suitable for everyone?
Learning Financial Trading today is not difficult: there is the possibility to start with completely free trading platforms and there are free courses of the highest quality (we recommend avoiding paid courses).
Can anyone start financial trading? From a practical point of view, yes. There is no need for large capital, since 250 euros is more than enough, and the basics can be learned easily.
Even with eToro it is possible to copy in a completely automatic way what the best traders do.
However, it must be said that financial trading is not a game: those who are not willing to put in at least a minimum of time and effort, it is better not to do it.
Another really important aspect to remember is that to do financial trading you must rely exclusively on authorized and regulated intermediaries: it is the only way to avoid trading scams.
Precisely for this reason we have included in a previous paragraph the ranking of the best reliable trading platforms and we have also reviewed some of them specifically.
Technical Analysis and Fundamental Analysis
We explained that to do financial trading it is necessary to make predictions on the performance of a stock to decide whether it is better to buy or sell short.
But how is it possible to make these predictions. Traders have two tools at their disposal:
With technical analysis, the evolution of the value of a financial security over time is taken into consideration and forecasts are made using mathematical tools (trading indicators).
Fundamental analysis, on the other hand, takes into consideration the fundamental factors that determine the value of a financial security to determine its future price.
In general, technical analysis is used for short-term financial trading (intraday trading) while fundamental analysis is more appropriate for long-term investments.
To give an example, those who trade Amazon shares using technical analysis buy or sell short by looking at the stock price charts while those who use fundamental analysis take a look at the balance sheets and sales.
Real-time listing of Amazon shares.
Obviously many beginners who are unable to do analysis use eToro to copy the best (and learn). Those who use ForexTB have the advantage of being guided step by step over the phone by a real expert.
Financial Trading Market
The main available markets for financial trading are:
The platforms that we reviewed in this article allow you to trade, with a single interface and a single account, on all these markets in a simple and secure way.
It is interesting to note that the concepts of technical analysis (price analysis) apply identically to all markets.
Professional financial analysts are able to make predictions on a stock with technical analysis even without knowing what stock it is. It does not matter if it is a stock or a cryptocurrency: the reasoning behind it is always the same.
Obviously, for those who apply fundamental analysis, the situation is different: you need an in-depth knowledge of that market and that stock to decide whether it is better to buy or sell short.
Financial Trading of Stocks
A Stock is a Share of the capital of a company. Its value ultimately depends on the company’s ability to generate profits.
The stocks are listed on the stock exchange, regulated markets where it is possible to buy or sell. Stock market indices are an average of the value of a group of shares, grouped by sector or by stock exchange where they are listed.
Financial traders can decide to bet directly on indices instead of individual stocks.
Financial Trading of Commodities
Commodities are raw materials whose value can be standardized and which can be stored in a simple way.
To give an example, oil is a commodities because there are standard types (Brent, WTI) while diamonds are not since no two diamonds are alike.
The price of raw materials varies based on the law of supply and demand. Usually, in times of economic growth, prices rise (industry increases its needs) while they fall in times of crisis. Some commodities are also affected by geopolitical factors: for example, oil can go up in price (a lot) when there are problems in the Middle East.
Among the main commodities we mention:
Financial Trading of Forex
The forex market is the largest, most liquid and most efficient market in the world. On forex, currencies are exchanged: for example, it is possible to buy dollars using euros.
The forex quotes are always expressed as currency pairs: in fact it is impossible to buy one currency unless it sells another at the same time.
What do these prices depend on? Ultimately, the relative strength of the respective economies and the convenience (or not) of making investments in the geographical area of reference.
Those who want to make forex forecasts must also take into account the action of central banks that have the power to change exchange rates by adjusting the official discount rate.
Financial Trading of Cryptocurrencies
Cryptocurrencies are the most innovative financial asset and, probably, also the one that generated the highest returns in history.
Cryptocurrencies are virtual currencies whose value does not depend on a State or a central bank which are usually managed in a decentralized way thanks to a blockchain.
The great advantage of cryptocurrencies is that they are not subject to inflation. Since these are truly very innovative projects, their value can however fluctuate a lot. There are times when it rises in a tumultuous fashion like 2017 or the end of 2020. There are other times when the value falls.
For financial traders this is always good news as they are making money right when the markets move, no matter which direction.
Among the main cryptocurrencies, we mention:
- Bitcoin Cash
- Binasce Coin
The most important cryptocurrency is obviously Bitcoin. Here the real time quotation:
Professional Financial Trading
Up to now we have talked about how to start financial trading, starting from scratch: it takes very little, a good free course (and not even that if you do automated trading with eToro) and a small capital.
However, the dream of many is to get to do professional financial trading. In simpler words, the goal is to live by trading.
Many scammers catch their victims with precisely this promise: a simple and effortless way to make a living from professional financial trading. Those who rely on these scammers lose everything in a short time.
The reality is that doing financial trading in a professional way is possible for everyone but it takes a good capital to invest and a lot of experience.
Most of those who do professional financial trading really started from scratch but it took them time and a lot of effort, starting with a small capital and making it grow gradually: there are no shortcuts!
Financial trading means taking advantage of changes in the prices of listed securities to make a profit.
It is possible to trade on various markets such as stocks, commodities, forex or cryptocurrencies.
A form of speculative investment, particularly profitable.
You buy stocks to make money when the price goes up and you sell short to make money when the price goes down.
There are great free courses (like ForexTB’s) that detail how to become a trader. Usually the necessary capital is very small, 250 euros are enough.
Probably eToro since it allows you to copy, in a completely automatic way, what the best traders in the world do.