The path to a profitable trader can prove stony and tough. Use this free beginner course, which introduces you step by step into the trading world and clarifies the most important questions.
Trading vs. Investing
The transition between the disciplines of trading and investing is fluid. However, it can basically be said that investments are more likely to be those trading positions opened with the intention of a holding period of, for example, 6 months or more. A well-known example of an investor is undoubtedly Warren Buffett, who said that he only calls his positions real investments if he plans to never sell them again. He therefore intends to receive regular cash flows in the form of dividends. Even if he partially resells investments, this usually happens over a longer time horizon.
The trader, on the other hand, tries to exploit the price fluctuations in an underlying (such as a stock or a cryptocurrency) and close his trading positions within a reasonable time frame. As will be seen later in this article, this time window can last from a few seconds to several weeks or months, depending on your personal trading style. In order to work with the sometimes small price fluctuations, a so-called lever is often used to multiply the retracted yield. More about this in the chapter “With which instrument do I trade?”.
Technical Analysis as a Methodical Toolbox
Chart technical analysis is a popular methodical tool to navigate the apparent price jumble, analyze market conditions, derive scenarios and trade them. This method is not a holy grail, but the technical analysis of traders is applied with varying intensity. But it can be said that no short-term speculator does not use at least basic elements such as resistance and support zones or trend lines. Finally, it helps to read and interpret a chart – a craft that will be helpful later in the Trading Strategies chapter.
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Why do I want to learn Trading?
It is helpful to answer a few personal questions before starting your journey. The right attitude to and expectations to the trade help to overcome thirsty stretches and motivational recessions and to sharpen your own consciousness.
So why trading? Is it all about making money? If so, why not do an alternative job, for example, as an employee? Here you immediately get a decent salary and do not have to wait months or even years to finally learn the profitable trade. The argument money helps, but it will not motivate you alone. Are you more likely to be the idea of being independent and a free person? With the possibility of theoretically working from anywhere? Or to act at the pulse of the markets? Answer these questions yourself in a quiet hour. Read also the accompanying article “I want to become a trader” by Uwe Wagner.