One of the good things about the modern world is that the world of investing is now open to anyone with a computer, instead of a limited number of select fews like it was in the past. You had to know a broker, have them place orders for you… and you couldn’t react fast if stocks were going down, since you were still depending on a third party to fix that for you. Now, you can trade from the comfort of your own home, and your broker is replaced by a trading platform that will have all your orders in check. It will allow you to determine at which level you want to enter or exit a trade, and do it for you in a matter of seconds, at any time of the day or night.
I am a big fan of automation, in that it saves you a ton of time. As part of my investment plan, I wire all the money that is left on my current account after my monthly bills have been paid, directly into savings. If the money is not there, it is way more difficult to spend it. I don’t trust myself to diligently save every month, so I let the computer do that for me. That is the best way to reach your financial goals. I am not a big spender, but anytime I have money left on the account, I feel like it is ok to spend it, and there generally isn’t enough to invest when the month is over. Just like 401k contributions are deducted from your paycheck every month, sending money into your investing and trading accounts on the first of the month will get you into the habit of saving, and since the money disappeared early on, you won’t even miss it.
Getting started with trading is pretty straightforward. Whether you decide to go with stocks and share, forex, or even binary options, the online trading platforms generally offer you to create a free demo account, so you can get familiar with their features and trading in itself. Because trading can seem complicated at first. Fear not, there are plenty of tutorials out there to help you.
The basics are that you can buy a stock, a currency pair, a commodity, etc. and if the price goes up, you make money. If you think the price is going to go down, you can also sell these assets, that is called taking a short position. The same way, if the price of the asset you shorted goes down, you make money. How do you know if the price is going to go up or down? Well, that is where it gets tricky. You can study the markets, and learn about external factors that affect the direction of the markets, such as politics, the health of an industry, and so on… you can also study charts and try to determine patterns.
The more you educate yourself about trading, the more confident you will be when placing a trade. You can also limit your risk by setting a level of loss you are not willing to cross. That is called a stop loss. If you are long on an asset, and the price goes down, say it was $100 when you bought and now it trades at $97, you can tell the system that should it cross $95, you want out. Your maximum loss in this case would be $5. You can also tell the system to take a profit when the stock reaches $110, so if that happens when you are at work, or sleeping, the trade still gets closed.
Once you are used to opening and closing trades, and have become a confident investor, you can look into trading on margin. Most platform will allow you to do so, generally for up to 1:50. What does that mean? Well, if you want to buy an index that is $6,000 for example, but don’t want to tie $6,000 of your cash to the trade, you can commit only the money you are willing to risk. Say you put 10%, or $600 into that trade. You can now afford to see the index go down to $5,800, a potential $200 loss, because that is covered by your $600. If it goes to $6,200, you have just made yourself $200, while only putting down $600. There is an added level of risk to trading on margin however, as if your stock goes below $5,400, your $600 will be wiped out to cover the loss. So only increase your margin once you know what you are doing, and never trade money you can’t afford to lose.
Trading requires a little getting used to, however, once you get the hang of it, it is pretty simple, and you can make quite a bit of money if you know what you are doing. What I like about it, is it is open to anyone, and most platforms have a pretty low entry level, so you can start trading with less than $100.
There are many more ways to make money at home, but trading is probably one of the less time intensive ones. Whatever you decide to sell, a physical product, or your skills by offering consulting services for example, it always require you to spend a great deal of time chasing clients and promoting yourself. Whereas trading can be as active or passive as you want it to be. At times, I trade daily, and when I don’t feel like it, I can go a whole month without looking at my trades. Some investors only open up their trading accounts once a year when they report their profits. If you wonder how that’s done, look for financial accounting help from experts, rather than making mistakes that could be costly. It would take you hours to figure out the best way to optimize your earnings, and that time is probably best spent improving your skills or making more money.