Is stock trading easy?
If you’re looking to make lots of money, you may be wondering if stock trading is easy. After all, stock trading appears a lucrative side hobby and a successful career for millions of people across the globe. You might be thinking: why can’t I give it a go?
Unfortunately, stock trading may not be as easy as it sounds. Although the basic premise of trading is to buy or sell a stock to cut a profit, and obtain a small ownership of a company, there are varying levels of difficulty involved. Not only are there complex strategies and mathematical and analytical skills involved, but you also need a deep understanding of your own psychology. Then, you also need to learn the different types of trades like Forex, options and futures, to name just a few.
However, despite the seeming complexity of the job, there is no reason why you can’t learn. Aspiring traders of all ages can learn how to successfully trade stocks. And in fact, stock trading itself can be considered easy – it’s making consistent profits which is often the hardest part.
Make a living stock trading
Many people dream of quitting their day jobs to play in the stock market on a casual basis, with big aspirations of becoming an overnight millionaire. But although it is possible to cultivate significant wealth, it takes time, skill, dedication, experience and discipline to see these returns. It is by no means ‘casual’ as you need to watch over your stocks periodically and decide your next steps accordingly.
On the other hand, stock traders can start from the comfort of their own homes. Long gone are the days where traders are thrown into the exchange pits. From this point of view, making a living while stock trading can be effortless. Learning the skill can be acquired easily online too through the medium of digital courses, diplomas and certification schemes.
The key to remember is that stock trading can be risky – but it’s all about risk management and making calculated decisions. These types of skills can only be learned. Indeed, you have to know that when the market does move against you, there is nothing you can do about it other than to cut your losses.
Set and forget strategy
A top strategy that you might already be familiar with is the set and forget method.
This approach is widely celebrated and used because it is built on the principle that slow and consistent deposits is the way to make profit over time, and is typically less risky. By aiming for a longer strategy, say 20 years, where you will invest and ‘forget’, you’re letting the stock market do its job and accumulate the wealth for you over time.
The downside to this approach is that you need a significant amount of capital upfront that you won’t need in 10 or 20 years. Some investors will spend years saving up out of their own salary before putting down any money on a stock so that they have a wide enough financial safety net should any hiccups occur in the investor’s life.
By contrast, day trading involves short-term strategies that are in stark contrast to long-term investment plans, and come with a higher risk but lower capital at stake. As the name suggests, it involves opening and closing positions on the same day in a strict trading window. A day trader will make these trades on multiple days throughout the working week.
Day traders, however, do not need to concern themselves with the complexities and inner workings of a company. While regular traders buying stocks will expect to study a company’s underlying asset for their own benefit, day traders take advantage of the day’s fluctuations – and don’t need to care so much about an individual company.
Another advantage of day trading is that traders can work from home and for themselves. However, it is not an ideal career choice for people who are looking for flexible or low-key work. This is because day traders still need to stick to a stringent plan and strategy, and have to watch their stocks throughout the day in order to manage them properly.
How to start stock trading
Stock trading can be complicated for beginners. There is so much information online that it can be overwhelming to separate misinformation from fact, too.
Without proper guidance, experience and education, trading stocks can quickly turn hectic and dangerous. That’s why most traders start out with a practice or fantasy brokerage account to put their theories and strategies to the test before moving actual money.
But the first ‘investment’ you should make is in your financial education. The best way to learn how to trade stocks, and ultimately how to start gaining wealth, is through an accredited financial trading course that teaches you the many technical terms and methodologies involved. You need to lean initiatives like scalping and swing trading, the volatility of the market and the trading lingo. You also need to practice basic money management and learn about risk reward and the ‘trading psychology’ such as how to overcome our natural instincts, greed and fear.
Without expert guidance, you run the risk of blindly following trends which may not be in your best interests – and could cost you a small fortune in the long run, too.
Is stock trading hard?
Stock trading itself is actually relatively easy and straightforward – it’s turning a profit and making money from trading for a living which is the difficult part.
Every trader needs to know when the market is working favourably or unfavourably. Knowing when to step away from an investment is a key skill traders must hone – but one which is not developed easily.
Therefore, the only way stock trading can be described as easy is if you have all the knowledge and experience to back up your investments and boost your confidence in trading. But stock trading doesn’t need to be difficult either.