What Principles Underlie Trading?

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Trading Principles
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Due to the large volume of transactions on the Forex market, many investors have decided to invest their personal funds in trading. There is no need to hope that in the first days, trading will be able to bring impressive amounts. It all depends on training, understanding the market, the ability to analyze the situation, and observing the news agenda of the world’s major economies.

However, forex trade in Nigeria can give novice investors the opportunity to multiply their savings and not think about employment.

Trading Basics

The trader earns on the price difference. It sounds simple, but the financial market includes many difficulties and nuances.

The theoretical foundations of Forex trading include the study of the following concepts:

  • the history of the emergence of a market that combines the stock, currency exchange, trade in precious metals, and raw materials;
  • the attractiveness of Forex for investment and stable income;
  • psychological preparation of traders, the ability to manage the emotional state;
  • analytical tools, the use of fundamental and technical analysis, “reading” charts;
  • the purpose and use of trading strategies, the theory of disciplined trading.

Equally important is the management of capital and losses and risk insurance by hedging.

Benefits

Trading is carried out by investors with different budgets and performing operations with different assets. Those who do not have a large budget can use the services of intermediaries who can provide borrowed funds to perform certain financial transactions.

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If we talk about the obvious advantages, we can highlight the following points:

  • the market has high liquidity and great opportunities for earning;
  • you can trade at any time of the day, so you can not be tied to a specific geographical location or time of day;
  • profit depends on the number of points by which the price of the traded pair has risen or fallen;
  • all transactions of a trader with the participation of leverage must be secured by deposit collateral.

Even theoretical knowledge may not save you from losing your budget. Therefore, experts advise always to arrange personal experiments. You need to open demo accounts, start working on your strategies there, and understand how the market lives, how it functions and what it depends on.

Only after training is it worth opening a real account. However, in this case, you should not rush with large amounts. The first deposit should be such that in case of any trouble, this amount is not afraid to lose. After all, if the entire budget is spent immediately, then the continuation of trading is out of the question.

Proven trading platforms provide educational materials and help you use money wisely at the initial stages. However, the adoption of important decisions, the risks of losing the budget, etc. will depend only on the platform user.

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Paschal Okafor is NaijaTechGuide Team Lead. The article What Principles Underlie Trading? was written by NaijaTechGuide Team. The article was last modified: July 18th, 2022
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