The term investment must be commonly heard, what about trading? For those who don’t know, trading is a buying and selling activity in the futures market and the equity market. Later, many people plunged into the world of trading in search of additional sources of income, and millennials are no exception.
When deciding to trade, prospective traders—a term for someone who trades, should know the basics of trading such as types of trading instruments, trading strategies, to factors that can affect profitability.
Interested in doing it? Let’s start learning trading from now on.
What is the difference between Trading and investing?
Learning to trade for the first time can start from understanding the difference between investing and trading. Simply put, the main difference between trading and investing lies in the time frame.
Usually investors will invest their capital to make a profit in the long term. After buying an investment instrument they will keep it. It’s different with a trader.
Trading is carried out in order to make a profit in the near future. Instrument buying and selling transactions are generally carried out quickly when price changes occur. If you miss the right moment, it will potentially cause losses. That’s why the holding period of trading tends to be short, it can be months, weeks, even hours.
In terms of risk, trading is considered to have a higher risk than investing. Because, to develop investment takes longer. This is the reason why investment risk is lower.
How to trade for beginners?
It should not be arbitrary, starting trading should be equipped by enough knowledge. Otherwise the possibility of losing capital is even greater. This is why learning basic trading is necessary. Here are the tips.
Know the types of Trading instruments available
In Indonesia, you can find several trading instruments, such as stock, forex, and futures trading. What’s the difference?
Shares are documents of ownership of a company. Stock trading in Indonesia is regulated by the Indonesia Stock Exchange (IDX). If trading stocks, then the trading schedule, number of unit lots, and price fraction also follow the provisions of the IDX.
Meanwhile, forex stands for foreign exchange. In forex trading, the instruments traded are foreign currencies. Forex transactions are open 24 hours, usually five days a week. You can make transactions through the forex trading platform.
In addition to forex and stocks, there are also futures as other trading instruments. Futures are financial contracts for the purchase or sale of a commodity or asset. You can find this instrument through the Futures Exchange.
Find out the right trading instrument Tips
Before you start trading, try to figure out how to choose the right instrument in order to create a comfortable trading process. First, pay attention to the liquidity of each instrument. The higher the liquidity, the easier it is to resell.
It is also worth paying attention to fluctuations in the price of the instrument. If the change in the price of the instrument occurs frequently, then the chance to get a profit is even higher. So it is with the risk.
Finally, choose the initial capital deposit according to budget capabilities. Some ordinary people think that starting trading costs a lot. In fact, today there are also many offers of trading instruments with low capital. For example, stock trading can start from Rp100, 000.
Learn How To Trade On A Demo Account
Trading theory is useless if you don’t practice it. For those of you who are interested in trading forex, it is advisable to do demo trading to find out how to develop a trading strategy to how to manage finances.
Prepare Capital
After learning to trade through a demo account and choosing the right instrument, it’s time to prepare the initial capital. Later, the capital can be paid through a trusted broker. Why use a broker?
For the case of forex trading, forex traders are generally dominated by large banks around the world. The standard of transactions carried out is clearly beyond the individual trader’s budget. The Broker will act as a trader’s liaison with forex traders.
When choosing a broker should not be arbitrary. Please check the legality of forex brokers through the Jakarta Futures Exchange website or the Commodity Futures Trading Supervisory Agency.
Final Words
Interested in getting into the world of trading? Make sure you learn basic trading first to minimize losses. If you think trading is risky enough, then there is nothing wrong with starting another type of investment that offers low risk.
