What is the purpose of a trade? The answer depends on what kind of trader you are and who you want to be. A beginner may prefer to make trades for fun but a professional may focus his trading on making money through high returns. Your goal when starting out as a trader is to find ways to maximize your profits while minimizing risks. In this article, we will look at how to set up a buy-and-hold strategy to grow your wealth with minimal risk.
How Do I Trade Day Trading?
Many people think that day trading requires hours or even days to learn and master the technique. This is not true. For beginners, it all comes down to learning a few basic concepts. So after reading the rest of this guide, you can begin day trading without any special equipment. If you want to go further into investing like stocks, ETFs, cryptocurrencies or commodities futures, check our comprehensive guide on those topics too.
1. Select an Investment Strategy
A fundamental approach (or one of several) is the most common way to identify short term investment strategies in trading. Generally speaking, there are three approaches to fundamental analysis: active, passive and systematic. An active style of analysis is more about technical analysis where the charts are used to determine trend, reversal and support or resistance. Passive analysis involves looking at fundamental ratios such as price/earnings ratios, liquidity and volatility to identify trends in the market. Finally, systematic analysis focuses upon pricing relationships over time on a scale ranging from 0 to 100. These different types of analysis offer investors many different opportunities for trading strategies. However, we recommend sticking to only 2 approaches at first and then combining them into your own unique strategy. When doing so, you’ll become better equipped to deal with various issues related to markets, such as leverage levels, margin requirements and credit risk management.
2. Identify Your Goals And Trading Style
Before you get started investing, it’s important to know yourself. You need to consider whether you want to be a long-term investor or a day Trader. As a general rule of thumb, if you are interested in long-term growth, then a longer-term approach should be taken. Meanwhile, if you’re looking for immediate gains, you may choose to buy and hold some assets. Don’t be discouraged if your goals differ but remember that they are very similar and that you need to come together as a team to achieve success. Investing in individual currencies requires specific knowledge about each country’s economy, political situation and currency trading platform
3. Choose Your Platform Of Choice
The best platform to use to trade in crypto assets is Coinbase. If you don’t have a bank account, Kraken can also be considered. Both platforms are secure, easy to use and provide a place to deposit your funds. They have low commissions and they are open 24/7. Another alternative is eToro. It offers slightly lower commission rates and has no minimum cash requirement. But there are fees associated with using their services so it might take some time before you see significant results. Also, the platform doesn’t allow users to withdraw fiat currency directly into their accounts. However, it does give access to certain coins that are accepted by major card issuers and provides instant withdrawals for U.S. users.
4. Learn About Leverage Levels
If you plan on taking advantage of buying-and-holding strategies, then learning about leverage is key. Lenders usually require that you maintain minimum leverage levels. However, there are other factors that affect your level of leverage, such as a specific asset class’s price. So your choice can significantly impact your profitability. Remember, you shouldn’t use leverage unless the market demands it or if the return is not worth sacrificing quality. Once you have learned how leveraged positions can work for you, try to optimize your balance for maximum profit potential.
5. Know That Risk Is Always On Your Side
There’s nothing worse than setting up your entire portfolio in order to find only a small amount of profit. This can lead to catastrophic losses if you get involved quickly with multiple assets. Instead, learn about these things before you even commit any money. There are plenty of free resources online to help you understand the basics of trading, but we recommend checking out Trading Beasts’ FREE course “How to Master Technical Analysis”. Additionally, you can take advantage of financial advisors who can help you manage risk and monitor your investments for you. We also highly recommend working as part of your broker’s sales force since they tend to have hands-on experience dealing with finance and retail clients alike. All this information will increase your chances for successful day trading and hopefully help you increase your profits along the way.
6. Be Ready To Take Risks
Day trading isn’t for everyone. One of the biggest disadvantages of these investments is that you are always risking. At least in theory. No matter how much technical analysis you do and how well your research is done, there’s always a chance of losing money. Even though you might be a skilled trader, bad luck can happen anytime. Even if all your trades are right, it can still happen. Make sure you diversify your portfolio to include assets that may be less reliable than others. Just because you have large sums of money invested in Bitcoin does not mean you can afford to lose everything. After all, you may need extra capital tomorrow to pay off debt. Therefore, make sure to always plan ahead. There may come a point when you can’t wait for profits and it sucks, but just remember that you will still be able to meet your objectives. Having some liquid assets available on hand will give you some peace of mind, however.