Hello, dear readers of “Biznesmenam.com”! Today we will talk about playing on the stock exchange : what it is, how a novice trader can start playing on the stock exchange on the Internet, what strategies of stock trading exist.
In this article you will also learn:
- what are the features of playing on stock exchanges via the Internet (online);
- what financial instruments can be traded;
- what is the minimum capital required for beginners to play on the stock exchange.
In addition, in the publication you will find valuable tips on trading the stock exchange for beginners and novice traders, as well as answers to frequently asked questions.
So, let's begin!
Read about what stock trading is, how a beginner can start playing and winning on the stock market on the Internet, what are the most popular stock trading strategies - read in this issue
How can a beginner make money on the stock exchange?
Today, a huge number of brokerage companies successfully operate on the Internet, with the help of which anyone can start making money on the stock exchange, having a small reserve of funds for investment. The broker will provide you with the necessary tools for trading on the stock exchange. Brokerage companies such as Alfa Capital, Uralsib, Troika Dialog, VTB, Finam and others have fairly high ratings on the RuNet. They have managed to establish themselves in the market as a reliable partner, the majority of clients trust them. The brokerage company will not only give you access to the exchange, but will also provide preliminary training. After which, you will be able to independently use the software tools provided to you for traders.
Types of software for online trading
A variety of software has become an integral part of effective online trading. The software is used to create trading terminals, strategy testers and templates, and robot advisors.
Software for beginners
Novice traders, due to lack of knowledge and experience, prefer to use automated systems as much as possible. Their arsenal of trading methods is dominated by robot advisors, ready-made strategy templates and programs for receiving trading signals, and the popular MetaTrader 4 as a trading platform.
Rice. MetaTrader 4 terminal window
The trading process is helped by mastering training programs that are equipped with functionality with examples of transactions, terminology, principles of operation of exchanges, and other introductory materials.
Software for professionals
Programs for professional traders are aimed at deep analysis of the market using methods of fractals, clusters, quanta, volumes, etc. ATS and strategy testers are used as auxiliary tools in the preparation of individual trading tactics.
Examples of software for professional trading include the platforms ATAS (Order Flow Trading company), SaxoTraderGo (broker Saxo Bank) and trading engines, for example, QScalp for high-frequency trading in short-term strategies.
Rice. SaxoTraderGo terminal window
Automated trading software
Programs for automatic trading are used in all types of markets (stock, Forex, cryptocurrency) and occupy more than 70% of all transactions. Such software may be based on analytics based on technical or fundamental data.
Automated trading software features include:
- market analysis according to the conditions of the features and trading strategy used;
- automatic opening/closing of transactions, with placement of stop orders according to specified conditions;
- risk management - limiting the number and volume of transactions in the event of unfavorable price movements.
To create a mechanical trading system yourself, you can use a special terminal TSLab (trading systems laboratory), which allows you to develop, test and optimize trading robots even without knowledge of programming basics.
Main advantages of TSLab:
- an interface that allows you to compose a script using ready-made blocks;
- Russian-speaking technical support;
- the ability to use robots on different trading terminals;
- built-in risk module that insures against high risks (transactions at inadequate prices, an excessively large number of open positions for one asset) and technical failures.
It should be understood that there is no perfect software for automatic trading - market conditions are constantly changing and require regular adjustments in the algorithms that were originally included in the program.
How can a beginner make money on the stock exchange at home?
If you plan to work from home permanently, pay attention to the fact that stock exchanges operate on their own schedule. The operating hours of some of them differ significantly - it all depends on which trading exchange they belong to. When you choose an exchange resource for trading, be sure to take this fact into account and choose those sites that are open at a time convenient for you. The second point that you need to pay attention to is the commission required by a particular brokerage company. Too high a commission will deprive you of normal income - look for companies that approach commission issues adequately.
How much do you earn on the stock exchange?
No professional broker will give you a definite answer to this question. Too many factors ultimately influence the earnings of the average trader. You shouldn’t fall for advertising that tells you that you can get a huge income in the first month of trading on the stock exchange. This is wrong. There are no limits that really limit a trader’s earnings. But this is in theory. In practice, everything is much more prosaic. On average, traders who take a responsible approach to trading on the stock exchange “raise” amounts that amount to about 20% of the funds they invested in trading. Even very successful traders rarely reach 40%. Accordingly, your earnings will depend on the size of your investments.
What is the problem with this scheme
In reality, no orders are placed on any exchange; the money is accounted for in the dealer's account and converted at changing exchange rates.
The second party to transactions becomes the Forex dealer himself. As a result, it turns out that if the client makes money, the dealer will lose; he is not at all interested in this. It is no coincidence that the Central Bank’s list of complaints against Forex companies includes falsification of client data transmitted to trading terminals. All this with the sole purpose of quickly showing them that they suffered losses due to “bad” investments.
How to make money on the stock exchange via the Internet?
It is not immediately that a newcomer to the stock market begins to enjoy trading (many people turn around and leave this market before this moment). Both psychologically and emotionally it is necessary to be a fairly stable and balanced person. In addition, you will have to master the technique of trading on the stock exchange, which not everyone can do. As a rule, out of 10 beginning traders, only 1-2 people fully master trading and remain. In order to start earning money, you need:
- Master the entire theory of trading on the stock exchange, get acquainted with its specifics and features.
- Learn to constantly control yourself, not trade in an excited state, and not act under the influence of emotions.
- Gain impressive experience working with various exchange platforms.
Features of online trading
Online trading allows you to use almost all exchange trading tools - select any financial assets, analyze the market situation based on historical and current quotes, use margin trading, replenish your deposit and withdraw profits, use manual and automated trading methods, and use the advice of professional traders.
A prerequisite is the presence of a stable Internet connection and an agreement with a broker.
Advantages and disadvantages
According to statistics, 95% of traders work remotely from the main exchange platforms, which proves the global trend in favor of online trading via the Internet. Comfortable conditions (the trader himself chooses the place and time to work), the ability to choose a financial platform and broker (you can work with several at the same time), minimal costs for technical equipment - these are the factors that determine the positive attitude of Internet traders.
In contrast to the obvious advantages, we should not forget about the potential threats of online trading:
- high risks of trading with leverage;
- poor quality internet broker service;
- imperfect legislation in the field of protecting the rights of traders.
Stock exchange how to make money
The process of trading on the stock exchange is usually called trading. Its main task is to make money on various financial transactions with currencies, shares of large companies, futures and more.
The stock market is quite multifaceted. Today it is represented by stock, derivatives and currency exchanges. For example, the MICEX in Russia is a stock exchange that specializes in trading shares of companies. But the RTS is a derivatives market; it works with options and futures. You must independently determine which exchange market you would like to gain a foothold in and where to trade. Choose those sites where work seems closest and most understandable to you. The success of your activities and, of course, your profit will depend on this.
Who is a trader
A trader is a person who trades in financial markets. Buys low, sells high.
To make money, traders must determine how prices will change. To do this, they study the market - conduct technical or fundamental analysis.
A good trader can say in any transaction: “I bought because... I sold because...” Everything is logical and reasonable. No intuition, no spontaneous deals.
What is bought and sold on the financial market is called a financial instrument. All financial instruments are divided into three groups: securities, currency, raw materials.
What is a stock exchange?
An exchange is a platform on which representatives of buyers and sellers enter into various transactions with each other. Most contracts are concluded with the help of intermediaries.
Comparing an exchange with a market is an incorrect example, since there is always a product on the market that belongs to the seller, and all agreements are reached without the participation of an intermediary. The absence of goods is the main advantage of the exchange, thanks to which it becomes possible to conclude a transaction without actual delivery.
How to make your first money on the stock exchange?
Beginner traders are recommended to start with the least risky start in the form of working with stocks or futures. Over time, you will develop an understanding of the process of making money with these tools. With your first experience, it makes sense to try your hand at working with derivatives or switch to Forex. The main thing is a large amount of regular practice and strict financial discipline. Do not risk too large sums, minimize the size of losses, minimize the number of unprofitable transactions and the first profit will not be long in coming.
Trading strategies in the securities market
Absolutely every trading strategy is based on either maximizing profits or minimizing risks. Both of these factors are opposed to each other. The task of each investor is to choose a strategy with the optimal balance of risk factors and profitability when trading shares. All strategies are divided into conservative and aggressive. However, there are also moderately aggressive ones. Beginners are advised to choose conservative (with minimal risk) strategies so as not to lose their initial deposit in the first days of working on the exchange.
The size of possible profits and losses
The earnings that can be earned by playing on the stock exchange are directly proportional to the amount of capital deposited into the account by the player. It makes more sense to measure potential income not in absolute numbers, but as a percentage of available funds.
The average profit of a successful stock exchange trader can be from 5 to 10% of capital. Such income can be obtained with a low level of risk. Professional traders can earn additional income by taking funds from other investors in trust.
The size of losses on the stock exchange can vary from a few percent to a complete loss of capital.
Experts recommend not allowing account drawdowns of more than 2% per trade. If several trades in a row bring losses, you should stop playing for a while and reconsider your strategy.
Money management. How to manage risks on the stock exchange?
Money management rules:
- Trade only with your own funds. No loans.
- Do not invest all your investment capital in one asset or one broker.
- Do not increase the transaction volume by an amount that exceeds the initial volume by 10 times.
- Avoid big losses.
- The optimal amount of losses for one trading day should not exceed 2% - 5% of the deposit amount. These numbers should be used as a guide when using stop losses.
- Try to make your profit 3 times larger than your losses.
- Do not open a large number of transactions at the initial stage.
Real reviews
Alena D.
“Modern Forex covers almost all the traders’ “wants” - trade either gold or Apple shares.”
Gordey
“I studied 3 courses for traders, from basic to advanced level, but only personal practice on a real account gives real effect.”
Phil
“Brokers cheat at every step, so at the first trading “signal” you should leave without regret - it will be more expensive to seek the truth in trading.”
Choosing a brokerage company
There is no universal formula. Therefore, you have to dig through tons of information to choose the most suitable partner. Pay attention to the size of the commission, the level of the software, the range of available services, and, of course, reviews on the Internet.
Many brokers have special starting offers for beginners. Study these sets of services from several companies to assess the prospects for further cooperation.
Evaluate the recommendations of experienced traders, experience in the market, as well as the authority that the organization enjoys in professional circles.
How to make money on the stock exchange with a small starting capital?
Today, there are almost no restrictions regarding the threshold for entering the market. You are allowed to start even with minimal amounts. Some brokers suggest starting with a deposit of 1,000 rubles. For earnings and success, the size of the starting capital is not of fundamental importance. The main task is to cover the purchase of the minimum lot and pay the broker’s commission. Of course, not all market operators offer such favorable conditions, but recently there are more and more available options.
Advice from Sravni.ru : You've probably seen an advertisement that Warren Buffett made a fortune for himself by trading on the stock exchange, the size of which is today estimated at 42 billion US dollars. At the same time, few people know that the return on capital invested by this trader in the stock exchange is about 30-32%. This is to think about how much the average person can earn from stock trading...
Types of trading
There are several types of trading depending on the methods of analysis, the assets used and the methods of trading.
Financial
The concept of financial trading can include all types of operations on financial platforms; if we distinguish it as a type, then it is customary to talk about trading assets of stock exchanges (stocks, indices, bonds). The main trading participants are large investors, corporations, and financial holdings.
The algorithm for algorithmic trading was given in the USA when the Securities Commission allowed stock exchange trading on electronic platforms (1998). Thanks to the innovation, the execution time of transactions has been significantly reduced (down to microseconds). Stock traders who began to use the new technique began to be called quantum traders.
Algorithmic trading is based on an automated trading method, where mechanical or automatic trading systems are responsible for executing trades. A special feature of the ATS is the complete elimination of subjective market assessment - all decisions are made by a “robot”. In MTS, a trader can interfere with the work, taking over some of the functions of the trading system.
When developing algorithmic trading systems, historical quotes of an asset or combined data for several instruments are taken into account. The main task of the creators of “robot advisors” is the ability of their “brainchild” to control the algorithm for opening/closing positions, taking into account changing market trends.
To independently develop a profitable trading “robot”, a trader will need special knowledge in programming, but you can also use a ready-made “product” by choosing an assistant for strategic trading priorities (trend trends, scalping, Martingale, etc.).
Internet trading
Trading via the Internet occupies the main segment of the financial services market. For example, the over-the-counter Forex market, operating exclusively via the Internet, has surpassed in liquidity all the classic exchanges of the world combined.
To take part in the auction, you must:
- choose a broker providing online trading services;
- register with him;
- install the trading terminal on your PC (you can use a smartphone or tablet);
- open an account and top up your deposit (there are micro and cent accounts for Forex trading).
To master the first steps in trading, brokers offer beginners the opportunity to work on a demo account, as well as take a training course (usually free of charge).
