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What Are The Most Important Things To Know About Financial Trading

Author: Mohamed Fareed
by Mohamed Fareed
Posted: Jan 23, 2019
financial trading

Though it sounds some high-end commerce stuff, in reality, it's nothing different than any other kind of trading done every day. In Financial Trading, the trade is made on stocks, forex or any other kind of cash instrument.

In this trade, the trading is solely done on cash instruments, such as

  • Stocks,
  • Commodities,
  • Mutual Fund,
  • Arbitrageur
  • Speculator
  • Hedger,
  • Bonds
  • Derivatives.

In this line of business, the traders are either working as a professional in any financial institute or some corporation. They are involved in the buying and selling of cash instrument in the stock market, commodity markets or the derivatives markets depending on the kind of trade being done.

How Is The Trading Done?

The pattern differs from one trader to another. While some of the traders focus on price momentum, the others work on technical patterns. Some of the traders focus on a limited amount of strategies that can be profitable. Here are some of the techniques used by the traders:

  • There is a technique known as an intra-day technique used by some of the traders, where, the trader holds a position which lasts for some minutes and even for seconds on some occasions.
  • Some traders withdraw the position before the make gets close to avoid risks. While on the other hand, some choose to stay in the position even after the market closes and let the profits run.

The other kind of traders are the day traders. If required, they borrow money for the trading. This kind of trade is called margin trading. Since the interest is typically charged on the overnight balance, the trader doesn't need to pay any fees for this, i.e., the margin benefit. In this case, the rate of margin interest is decided by the broker.

The Risks And Profits In Financial Trading

No kind of business comes without any loss. So, be prepared to take the loses and to face the risks before getting involved in this line of business.

In financial trading, the outcome can sometimes be extremely profitable, and sometimes you may have to face extreme loss. The high-risk traders face either huge profit percentile or a huge percentage of loss. And because of this reason, these traders get coined as "bandits" and sometimes as "gamblers" by the other investors of the business.

The day trading can be extremely risky if,

  • There is a poor discipline in trading
  • There is extreme stress to survive accompanied by inadequate risk capital.
  • If there is incompetent money management

All of these are an important part of the stock market training.

So, before getting involved in Financial Trading, one needs to know the extreme factors that are related to the business. They are involved in the buying and selling of cash instrument in the stock market, commodity markets or the derivatives markets depending on the kind of trade being done. Peoples are earning tones by financial trading, but sometimes, they even have to face extreme loss. So, be sure that you have done a vast reading on the market before getting involved in financial trading.

About the Author

Fareed is a graduate of computer science engineering, a writer and marketing consultant. he continues to study on Nano technology and its resulting benefits to achieving almost there.

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Author: Mohamed Fareed
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Mohamed Fareed

India

Member since: Feb 11, 2017
Published articles: 340

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