The Hustler's Digest StaffTrading is not exactly a walk in the park for a beginner. A successful trader is an emotionally stable person, knowledgeable, and willing to eat risks for breakfast. At least, this is what everyone seems to be saying.
Before thinking about trading or investing, you need to know there’s no definite recipe for success.
For example, Mark Zuckerberg and Richard Branson are both successful entrepreneurs, but their stories and approaches are as different as can be; at least on the surface.
Therefore, your focus shouldn’t be on their morning rituals or clothes. To become an expert in a domain or invest in something seemingly promising, research is the best first step!
Traits for trading success
When looking at some of the biggest entrepreneurs and their development, we can see a few important similarities that are hard to miss:
- Determination – Being determined in this context translates into passion for what you’re doing, the courage to push forward, and conviction (but not rigidity.)
- Possessing immense knowledge about the domain you’re about to invest in – Unless you already have the money to pay for experts, knowledge is a must.
- Choosing like-minded individuals – Although you need people who believe in your reasoning and understand your direction, be careful not to isolate yourself into an “agreement bubble.” Breaking the habit allows evolution too.
Why these qualities?
- Firstly, determination implies other characteristics like being decisive, having a goal/multiple goals, and preferring activity over inactivity.
- Secondly, a wide range of information lets you understand what you’re ‘betting’ your money on. Insights don’t work like magic. You need to feed a lot of information to your brain first.
- Being near like-minded people contributes to both determination and knowledge. Group sharing and info gathering is the best way to grow and learn about a subject. In this respect, trading and investing aren’t different.
Remember, being part of a well-established group shouldn’t discourage you from absorbing information outside your comfort zone.
Is money trading gambling? Key points
Everyone in the world seems to be asking this question, not only Canadians. To answer it, we need to define the terms!
- Trading means making recurrent but short-lived transactions, hoping that they would bring more revenue than purchasing and holding for a longer period.
- Gambling means betting on something valuable during an event whose outcome is undetermined. By doing this, one hopes for the return of the value or a bigger return.
For many Canadians without thorough training in entrepreneurship, trading online can seem like another form of gambling with fate.
Experts’ evaluation of the connection between trading and gambling reveals several key points that stand to offer resemblance. However, the differences are just as numerous:
- Gambling doesn’t require intense information about it to succeed, while trading presumes a priori knowledge to get quick profits.
- Long-time experience in trading will help you develop know-how and insights that most casino games can’t give you (card games are excluded because of ‘card-counting.’)
- On a personal level, gamblers seem to love the uncertainty, while traders seem to despise it.
However, there’s more to this picture!
Trading vs. investment
Making money in the stock market requires long-term dedication to learning its ins and outs. Therefore, in this context, you will need to know what trading implies versus what investing means.
You may have heard ‘trading’ and ‘investing’ used interchangeably, but their purpose in the stock market is different:
- Trading, as mentioned above, focuses on short-term transactions.
- On the other hand, investing means buying and holding the assets for an extended period.
How do these distinctions help you get extra money trading online?
Simple – instead of choosing between investing and trading, you can have both!
Toughnickel informs us that an intelligent investor can successfully switch between the two.
Combining the strategies is the safest way to extract more cash
Evidently, long-term investments are not the only way to make money.
For example, if you currently have overpriced stocks in your portfolio, the next step should be to sell them and buy another currently undervalued stock.
By having long-term investments and juggling with day trading, you can improve your tactics and increase the amount of money in your pocket.
As investors say – to reap from the stock market, you have to stay in the stock market!
Options trading and speculation
Options in the stock market are often defined by experts as derivatives that allow investors to buy or sell stocks at predetermined values and dates. Such options can either be “calls” or “puts”.
“Calls,” in this context, means betting on a stock’s positive evolution over time, while “puts” means betting on the stock’s failure.
Speculation is defined as a position a trader adopts in anticipation of future price fluctuations. This means that speculation implies a stock was incorrectly valued on the stock market.
Many speculators use options as leverage because they’re much cheaper than buying stock shares. However, options are not an easy juggle, and one may lose more than win without preparing.
Active investing and poker
Gambling and the stock market may mean the same thing to the average population. However, we know that the two are clearly separated areas of activity.
Even so, a multidisciplinary approach may help you increase your profits.
For example, there are countless articles about the similarities between investing and Poker or Blackjack. However, most of them offer key similarities that are easy to spot:
- Both imply risk control
- Both suggest a strategy based on math and analysis
- Both indicate an understanding of what the adversaries are planning
A 2020 study called “Hedge Fund Hold ’em” investigated the correlation between playing Poker and performing better as a fund manager.
Their result was promising – fund managers who won poker tournaments were more likely to bring approximately 1% to 5% more returns than those who did not.
Over an extended portion of time, the Poker-winning hedge fund managers tend to outperform their peers who don’t play or don’t win as often at Poker.
New online trading platforms
The Contemporary world is being engulfed by the internet. In high-developed countries, you can pay or receive money instantly, talk to a long-distance friend, or enjoy a sea-side view while working.
Knowing this, new online trading platforms feel like they should be popping up everywhere. Luckily, this doesn’t happen!
However, an exciting project has recently appeared
Kalshi is an event prediction trading platform that allows users to make money with their opinion.
By buying event contracts, traders change the price market and determine the prices for both YES and NO options.
An even contract is a novel type of asset that allows investors to make money by voting on Yes-or-No questions about the future.
Each of these questions has a predetermined date, of course.
Example: If you bought event contracts from a question and you guessed its outcome correctly, you will be rewarded $1 for each contract bought.
However, if you assumed wrongly, the event contracts bought will return $0.
As fun as this sounds, Canadians won’t be able to enjoy this platform right now. Since it was launched merely a year ago, Kalshi is only available in the United States so far.
A final word
Nobody can teach you overnight how to trade and invest successfully. However, this article aims to explain terms, expose strategies, and open you up to the future of trading!
The sources in this article are worthy of exploring, as each link will take you to valuable explanations and wise approaches.
Remember, always buy low and sell high!
