The RUVDS blog on Habré has seen everything: the popularization of JavaScript and cool translated materials, yachting, issues of education and professional development, burgers, cheeses, beer and calendars with cybergirls. The idea to talk about the basics of trading and working in the stock market has been with us for a long time, and here’s why. Most companies writing about stock exchanges have a clear goal: to get clients for their instruments and brokerage accounts, which means that in their articles investing is an extremely attractive activity that should become a hobby for every geek. The only thing we can offer new traders is a VPS with trading platforms, and we have no incentive to present the world of stock market trading as a means to get rich. We decided to make a series of articles about the basics of trading and the most popular assets for beginners. Honestly, without appeals, take money to a broker or open your own account in a specific bank. Well, it’s up to you to decide whether this is your path or not. Sometimes it is much more profitable and even faster to master a new development stack and upgrade your salary and stable income to the level you need.
Stock game
To successfully start working on the stock exchange, a beginner chooses a broker who becomes a guide for the novice trader in the world of financial services. Finding a good broker is about 50% of success, since the likelihood of making a profit without a reliable and professional organization of the trading process is almost impossible. Convenience in the process of concluding transactions online depends on the level of technological equipment and professionalism of the broker. The choice of a dealing center largely determines the level of a trader’s earnings, so before concluding a cooperation agreement, you need to pay attention to the functionality and level of convenience of the software, the analytical reports offered by the company, as well as the list of resources necessary to monitor the situation on the stock exchange.
Reliable brokers
Since choosing a broker on your own is not easy, especially if you are a beginner, for convenience we provide a list of reliable companies that have been working for a long time not only in the Forex market, but also in other financial areas:
- Alfa -Forex . This company has earned a reputation as a reliable broker, so we recommend it to beginners. The advantages include powerful analytics, low spreads, and tangible customer support. The company provides a leverage size of 1:200.
- InstaForex ( InstaForex). This is the best option for traders who want to trade independently. The broker conducts licensing activities. Over the past 7 years, the company has acquired regular customers and maintains a leading position in its segment. Beginners are provided with a leverage of 1:1000.
- Alpari . This is a broker that invests in training programs. Here you can trade and teach. Alpari provides a selection of PAMM accounts.
- Finam . Unlike previous companies, here the minimum leverage is 1:40. At the same time, the entry threshold is 30 thousand rubles - a considerable amount for beginners. Such conditions are explained by reliability; the company is licensed by the Central Bank of the Russian Federation. The company also operates a referral network that brings passive income.
Thus, it is not difficult to start trading on any exchange. The main thing is to choose a reliable intermediary.
Stock trading for beginners
After going through all the formalities at the stage of choosing a broker, a newly minted trader needs to learn how to assess the situation on the stock and foreign exchange markets. As a rule, technical and fundamental analysis are used for these purposes. In the first case, we are talking about the analysis of quotes of currency pairs in dynamics, and in the second, about the study of the values of fundamental indicators such as stock indices, balances on the trade or balance of payments, refinancing rates and other similar indicators.
How to lose money with a guarantee?
Most beginners in private investing make the same typical mistakes, which differ only in the scale of losses. Don't do this.
- Don't trade for luck or chance. Every action you take must be thoughtful and informed - and most importantly, based on data and analytics. For example, you saw signs of growth in Gazprom shares and decided to “dump” your stake amid the growth, and the next day they grew by 40%. Why? Because the market was waiting for the release of positive financial reports and increased dividends - the reports were released, growth began. You correctly read the market signal, but did not make a profit because you were in a hurry. And for an experienced investor, the state of affairs in the issuing company and information about all events is the most important tool. Even if you cannot give an accurate forecast and in-depth explanation of market processes, you should at least know what trends are worth selling, buying or holding assets in your investment portfolio.
- Don’t expect instant fabulous profits - you can’t “trade for 10,000 and withdraw 100,000 in a week” (even to scammers). Depending on the investment strategy, profitability is formed, which can also be negative. “Fabulous” profits can be the result of a risky investment by an experienced investor, but this is often just a matter of chance, because the results of high-risk investments are poorly predicted.
- Quitting your job to become an investor is the worst thing that can happen to a newbie. The path from the first thought to an experienced broker can take 3 years, or 5 years of fairly intensive training. I will speak directly from my experience: even after 3 years of specialization in financial mathematics, securities management and stock exchange business at a university, the only thing you can do professionally and reliably is to recognize scammers. “Making money” on the stock exchange does not work; you need additional training and practice. Again, basically, brokers who work with client accounts are employees of financial organizations and, in addition to commission payments, have a salary and, if necessary, can easily move horizontally to analytics or training. If you give up everything, install QUIK, connect your account and start “playing on the stock market”, get ready to eat little, dress poorly and save a lot. The conclusion is simple: either trading in the stock market is a source of additional income and an intellectual hobby for you, or you are consciously learning and changing your profession. And yes, trading on the stock exchange is not a game, it is work, even for a private investor.
- There are no mistakes worse than the previous point, but a confident second place goes to using the money you need now or in the near future for your first steps in the stock market. For example, if you are saving for a mortgage, a car or any other large and necessary purchase, and suddenly decide to quickly “save up”, leave this idea - the risk is too high. But if you have a “box” where you save your free funds and you are sure that you will not need the money in the near future (I recommend considering an investment period of 3 years), you can safely try your hand at increasing capital through a brokerage account. But remember - you may not only not receive additional profit, but also lose the principal amount of your investment.
- Don't mess with virtual currency.
The next two mistakes relate directly to the choice of investment instruments and they are two extremes of investment behavior.
- It is a mistake to use only one investment instrument (for example, invest only in shares of one company, only in dollars, only in gold, etc.). More precisely, in this case, you do not get active investment, but a rather conservative tool for “saving” money, which can bring income in the long term. This type of investment can be compared in efficiency to a bank deposit.
- It is no less a mistake to invest in everything, especially in risky instruments, obscure startups, new companies, in shares against the backdrop of hype around some events. This attitude towards your portfolio leads to a loss of profitability and a lack of understanding of the basics of structural investments. Ultimately, you may find yourself in a situation where you simply cannot predict the behavior of market participants and the market's reaction to them.
Here is this tweet
I am selling almost all physical possessions. Will own no house.
— Elon Musk (@elonmusk) May 1, 2020
caused this movement:
So predict your portfolio based on Twitter (by the way, an excellent way - there is already an understanding that the tweets of corporate CEOs, and even more so of politicians, and in particular D. Trump, actively influence stock market trends)
You know, what indicates that you have approached working in the stock market right? You must be bored. Excitement in investments (any kind!) is the worst advisor.
We choose the stock market for various reasons: out of interest, for investing and saving free funds, out of a desire to earn money, or simply to learn something new. Some developers, after getting acquainted with the stock market, change their specialization and go into the development of trading robots.
The stock market is a complicated story. In reality, no one can consistently successfully predict the future of the stock market: today you will hit the mark, and tomorrow other investors (that’s why this is speculative trading - in the good sense of the word). This, of course, is not roulette or a slot machine, but the whole difficulty lies in identifying the trend and learning how to do technical and fundamental analysis. Everything else is based on this. And programmers, mathematicians, and technicians are often good at analyzing trends, but to say from day one “I’m an expert in economics” is too arrogant and can turn against you. Remember: there is always a risk.
The essence of the game on the stock exchange
The main point of working on the stock exchange comes down to the need to choose a clear plan of action. Before starting work, the trader will need to choose one of the fundamental strategies or concentrate on working with indicators that are tied to exchange rate charts. Some technical analysis strategies also involve the use of analytical data arrays without the use of charts. Ultimately, indicators such as the amount of capital, the duration of trading and the number of transactions carried out are determined by the type of strategy chosen.
How to build a portfolio?
There are three main investment parameters: profitability, investment period and risk. Accordingly, each portfolio is determined by the relationship between these factors. Here, as in the old joke: choose any two. In the chart you can see the ratio for different types of investors.
I think the most optimal ratio for investing: diversify - invest at least 40% in reliable instruments, 10% in high-risk instruments, distribute the remaining 50% based on liquidity and your main strategy. The optimal investment period is up to three years (including due to tax laws). The easiest option to start is to open an IIS (individual investment account, we will talk about it later).
Online stock market game
Actual work on the exchange begins with submitting an application to open a transaction in order to sell or buy currency. Until the transaction is completed, a specific order is attached to it, and the fixed position has an open status. Often transactions are completed automatically, which happens when orders are triggered that limit the size of the maximum allowable profit or the maximum allowable loss. When a sell position is opened, it ends in a purchase or vice versa. If the trader acts as correctly as possible, the transaction is closed with a profit. For beginners who make a lot of mistakes and do not understand how to trade on the stock exchange, almost all brokers offer an informational helping hand in the form of paid or free courses, webinars, seminars and additional educational literature.
How to trade?
There are many strategies for trading in the stock market, but not all of them are suitable for beginners.
Let's look at the main ones. Scalping is a popular type of trading in which a trader makes a profit from any price movement. This is work on short time frames (sometimes even 5 minutes or a minute). Suitable for those for whom trading is their main job (profession) and requires concentration and attention to detail.
Fundamental trading is a type of trading in which a trader trades over the medium term using fundamental analysis. He analyzes and forecasts market movements and the totality of indicators of issuers of securities in the portfolio and, based on the conclusions received, makes transactions. This is a rather conservative trading method, it is quite suitable for beginners who start with fundamental analysis.
Technical trading - a trader trades on any time frames based on technical analysis. Transactions are closed not on the basis of information about the market and the issuer, but on the basis of forecasts of price changes based on how they changed in similar external conditions. Essentially, this is trading based on trend analysis. Suitable for more experienced traders, but already at the training stage it is worth starting to master the basics of technical analysis.
Another strategy suitable for beginners is medium-term trading. The operating principles are the same as scalping, but profit or loss is fixed based on price movements in the medium term (an hour, several hours, a day). This time is enough to conduct an in-depth analysis and make a decision or decide on a strategy. A very stable and comfortable trading method.
High-frequency trading (if you've been on Habré for a long time, you've probably read about it) is trading where traders are computers that perform millions of computational operations per second in order to get maximum profit. It is interesting, promising, and even more relevant for programmers, but you need to know that it is unsafe, requires knowledge and trading experience, and can also be attacked or blocked. It is not yet completely clear whether HF trading is the future of the entire global trading system, but it definitely has prospects.
Well, two types of trading are used exclusively by professionals and large institutional market participants.
Instant trading is trading based on price movements within different time frames.
Trading on long-term timeframes is trading based on a set of enlarged economic processes, external factors, market conditions and trends.
There is another trading strategy - repeating other people's actions in your strategy - will not lead you to professionalism and will not allow you to build competent relationships with the stock market. Reading stories like this is interesting and informative, but building your trading solely on copying is a very bad idea.
You can always test the chosen strategy “in the laboratory” using historical data and calculate what result you could get. This is additional “training” for your analytical skills.
So, you have become familiar with the types of trading and...
Next, I recommend that you read the blogs of large brokers (but remember that they are sometimes written not by professional financial copywriters or experienced traders, but by marketers with a philology background, so maximum criticality!), watch educational materials (you can even use basic university textbooks), go online -courses from well-known companies (for example, I like the free school for beginners Investments 101 from BKS; it is the most balanced of Russian-language materials). There is another way - to hire a teacher on stock exchange business from former traders or from a university; in a short time they will clearly explain the basics to you. But don't hesitate to ask about practical experience.
Throughout your training, you will need a demo account, where you can operate with virtual money and not incur a real loss (however, not make a real profit). (By the way, please note that the demo account should not inspire you, because, firstly, it is greatly simplified relative to the real situation, and secondly, it can motivate you and “play along”).
And now, when you are armed to the teeth with the basic theory and you know that Japanese candles are not sold on Aliexpress and do not fit Toyota and Honda, you can try to start working with real money on a brokerage account.
No, stop. I don’t want to seem like a home-grown psychologist, but I know from myself: be prepared that you are not the wolf of Wall Street. No confidence, no relaxation, no excitement. You are an inexperienced sapper in a minefield without a mine map. This means maximum rationalism, reasoning and caution.
Well, that's it, let's start.
You need a broker, or rather, an organization where you can open a brokerage account. The broker will provide you with access to trading instruments and will assume all technical and legal risks. The broker performs all actions on your behalf and at your expense (unless otherwise agreed), and you, as a trader, make decisions about what assets to purchase, how to build a portfolio, etc. If desired (often with a certain set volume of investment), you may be provided with a personal broker with whom you can consult via chat or by phone about some risky transactions, structured products, access to certain instruments, etc.
Bearing on the stock exchange
The position of the Bears when playing on the stock exchange comes down to selling an asset when the price falls, followed by the purchase of a similar amount of currency, securities or goods at a lower price. As a rule, novice traders immediately understand what a bullish game is, although there is essentially nothing complicated in concluding trades in the reverse order. Example from practice. Based on the results of the analysis, the trader notices that the price begins to decline after reaching the next peak. A sell trade is opened and remains open until quotes begin to decline further. If the value of an asset decreases significantly, the trader purchases a similar amount of currency at a lower price, thus providing himself with a profit in the form of the difference.
Forex market: why is it so attractive and how much can you earn here?
If you are not yet familiar with the concept of “Forex”, then in a nutshell we will explain what it is.
The Forex market is an over-the-counter interbank currency exchange market, that is, it does not have a single center (platform) where players, or as they are commonly called, traders, make transactions for the purchase and sale of currencies.
Unlike commodity and stock exchanges, Forex appeared later, in 1971, after the dollar was pegged to gold. Since then, exchange rates have become “floating” and it has become possible to exchange one currency for another.
For example, you can now freely buy dollars for euros, exchange francs for pounds or yens.
When a transaction takes place on Forex, it is customary to talk about such a concept as a “currency pair”.
That is, on the one hand is the currency that they want to buy, and on the other is the one for which they are buying the first one. This situation with the free conversion of one currency into another gave rise to the idea of earning money from the difference in the rates of these currencies.
Let's not go far and take the most obvious example of a currency pair: the US dollar and our Russian ruble.
This pair will be designated as follows: USD/RUB .
For example, today the cost of one dollar is 63 rubles 20 kopecks .
Now let’s imagine that today we bought 100 dollars at the current rate, that is, we invested 6,320 rubles .
2 days passed and the dollar began to cost 65 rubles 70 kopecks . This means that by selling dollars now, we will earn 250 rubles (6320 - 6570 rubles) . Doesn't seem like much, right?
Although that's not bad either.
So why do some people make huge amounts of money here? Maybe they invested several million?
Not at all! It’s just that in Forex you can use leverage and it will allow you to earn hundreds of times more. Let's figure out what it is and how it works.
The concept of leverage or how to turn $100 in one day into $1000
Let's say you only have $100 . This is a very small amount and the earnings from it will be small. However, when trading, your broker gives you the opportunity to use leverage.
Leverage is additional capital that your broker gives you so that your trade volume is many times larger than the initial amount available.
Typically the leverage is 1 to 100 (although you can choose a different size).
Example of how leverage works
Let's take the same numbers as in the first case.
You have $100 , but thanks to the broker, you get 100x “co-financing” of your trade and now you are making a $10,000 .
Now, with the same fluctuations, your profit will not be 250 rubles as in the first case, but 100 times more, that is, 25,000 rubles . But this is already interesting, since in most Russian cities this amount is close to the average wage.
Fact
In one trade you can earn as much as many people earn in a month. But here we must not forget about the risks.
The use of leverage also quickly contributes to the loss of capital in illiterate trading.
Thus, you, dear friend, can predict your income using simple mathematical calculations with only $100 in your pocket to play Forex.
It is the possibility of obtaining such fabulous profits on invested capital that attracts the foreign exchange market. Every day, thousands of new traders around the world come here in hopes of getting rich quick.
Fact
It has been proven that stock trading is one of the most profitable types of legal activity.
And if you understand this, you can not only earn good money using your own funds, but also manage substantial sums, trading with much lower risks, and receiving your percentage of the profits received in the management process.
All this once again clearly shows that you can earn thousands of percent per annum on Forex.
Next, let's look at the pros and cons of the foreign exchange market.
“Gaming on the stock exchange” or the whole truth about trading
Successful traders do not play, but work on the stock exchange. You have to do this every day. The main difficulty is the need to think a lot and analyze the current situation. Experienced exchange participants often advise forming the right attitude towards the profession. It is advisable to learn to perceive opening and closing transactions as a business. Most unfortunate losses and disappointments occur due to impatience, greed and inexperience of the trader. It is better to accept this feature right away, and the ability to predict the movement of the chart will definitely come with experience.
What to read on the topic?
- Moscow Exchange - desktop site of the Russian investor (one of)
- Quote.ru
- Review of scammers
- Brokers.ru has good analytical materials and examples, but remember that the site is dedicated to Forex, and Forex can be different (we’ll talk about currency later).
- Collection of investment ideas (can be analyzed as tasks)
- Lots of financial analytics. markets
- Working with portfolio strategies
- Money came
- Fanimani - a lot of separate cool videos
And of course, read financial, political and insider channels on Telegram - information appears there first (after Twitter ;-)).
The list of references and sites varies greatly depending on the selected tools, so there will be additional references in articles about different tools.
If you have experience in investing (positive or negative), tell us in the comments how you started, what you stumbled upon, and did you quit?
Trading principle
The main trading formula, although not golden and not extremely profitable, does exist. Here it is: pr = D*x - U*n - C, decoding:
D – average profit per transaction;
N – number of unprofitable trades;
X – number of profitable trades;
C – costs in the form of commissions and fees;
The formula shows that to make money on the stock exchange, it is not necessary that the number of profitable transactions exceed the number of unprofitable ones. It is enough to earn more on profitable contracts. To achieve your goal, you need to hold profitable positions for the maximum amount of time and quickly close losing trades.
The Importance of Trading Strategy
The chosen investment strategy determines the risks that the investor is willing to take and the investment time horizon.
If you rely on investing large sums in order to preserve capital and carefully increase it within a little more than a bank deposit, this is a direct path to a long-term investment strategy in the stock market.
If you are willing to take risks, if you want to quickly increase your capital, this is the path of a trading speculator.
Tools of the trade
Stocks are one of the classic trading tools. Main features: no leverage; when trading some stocks it is impossible to go short. An additional source of income is provided in the form of dividends.
Futures are a derivative financial instrument.
Currency – traded primarily through Forex dealing centers. Thanks to the impressive leverage (average value 1 to 100), it is possible to quickly earn or just as quickly lose a round sum.
Choosing an exchange: what exchange assets can be traded to make money
So, you have decided to make money on the stock market. All that remains is to choose an asset to trade and a reliable platform. The best exchanges will be listed below.
Stock market
How to make money on the stock exchange? Securities (stocks, bonds) can bring a stable profit of 10-15% per annum as long as you own them. Moreover, they will increase in price in a few years, so you can sell them profitably and make money.
Best stock exchanges:
- NYSE – a huge number of shares of world-class companies;
- Nasdaq - securities predominantly of the technical sector.
Changes in stock prices are influenced by the company's internal policies and events in the global economy; bonds - by the state of affairs in the country. To make money in the stock market, you need to master fundamental analysis.
Foreign exchange market (Forex)
Dollars, euros and other fiat money circulate here. 85-90% of participants in the foreign exchange market are speculators (“bulls” and “bears”), since inflation makes long-term investing impossible.
The following are considered the largest and most reliable exchanges:
- Alpari;
- FX Club;
- AMarkets;
- FxPro;
- Fibo group.
If you look at the reviews, only experienced players can make money on the currency exchange. An option for beginners is investing in PAMM accounts.
Cryptocurrency market
There are also traders (“bulls” and “bears”) and medium-term investors. Long-term investing is a controversial option due to the high volatility of cryptocurrencies. Some experts predict Bitcoin will grow to $50,000 (and some even to $1 million) in a few years. Others consider it a financial pyramid and predict collapse. Still others say that the rate will eventually stabilize at the average level of $2000.
The best cryptocurrency exchanges in the CIS are Binance and Exmo. The latter is more suitable for beginners, as it works with fiat money.
Advice. The best option for a beginner to make money is to form a portfolio of 5-7 leaders in capitalization and play on growth. For example, buy Bitcoin, Bitcoin Cash, Litecoin, Ethereum, EOS during a decline, and sell it profitably a few months later.
How to make money on cryptocurrency - read
