Everyone would like the facility to generate extra cash without having to put in huge amounts of effort. While some of us are lucky enough to be in the jobs we love, regardless of the pay we get from them, too many really only turn up for the salary that gets transferred into their bank account every month.
So, the idea of getting some of your hard-earned cash to do the work for you can be very appealing. And one way to achieve this is by getting a handle on how to trade. By dealing in different trading markets – such as the commodities markets and foreign exchange market – you have the potential to see a much better return on your money than you would in a savings account.
by ollesvensson Caption: The changing price of coffee beans could make you a profit (or not)
Many people are wary of trying their hand at trading because they don’t know enough about it. But, when you consider almost any type of business, the basis is always the same. A business offers goods or service for a certain fee – it’s up to the buyer to decide whether they’re willing to pay the price that is asked. Whether it’s on a market stall or in a multi-million dollar business, the principles remain the same. And as long as the trader knows their business, they’ll be able to make a profit from it.
Trading – the variety that takes place on Wall Street or in the City in London – works along just the same lines. For example, if you look at the foreign exchange market (the biggest market in the world), it’s all based on people’s perceptions of how valuable one particular currency is when set against another. For an amateur trader, the easiest route into trading in foreign exchange is to use a spread betting provider. When you spread bet, you’re betting on the future change in the margin between two different currencies. No-one can know with any certainty what will happen to a currency’s relative strength or weakness compared with others. However, by following the news and looking at charts that show a currency’s trend over different time periods, you should be able to gauge the likely trajectories of different currencies.
Since it became possible to trade online, it’s easy for anyone to have a go at trading. Tradefair is one of a suite of providers where users can set up an account and begin to experiment with spread betting in different markets. Tradefair gives its users access to more than 3,000 different markets, and there’s also the possibility of trading in simulation mode, where none of the trades you place involve real money. This offers a novice trader the perfect learning environment. You can try out different strategies, get to grips with how to place spread bets, to understand the margins and work out how to set stop losses etc, all without any real financial risk.
Once you’ve spent some time practising the theory with simulated trades, you can take first steps in trading real sums of money. The best advice is to take these steps a little at a time. Though it may be tempting to weigh in with a big gamble through a spread bet, there is always the risk that you’ll get it wrong and end up losing money. So, if each trade you make is small, you’ll make incremental progress but never be liable for a huge loss.
by Images_of_Money Caption: Start small when learning about online trading.
As you gain confidence in what you’re doing, you’ll know when you’re ready to put bigger stakes into different trades. The only way to see if trading is something you have a knack for is to have a go.