Trading is everywhere you look. From the hopeful forex trading, the Instagram accounts that follow you every week, to the endless affiliate ads showing you the next best trading app – the temptations of trading are hard to escape. Whether it’s cryptocurrency, forex or stocks, there are plenty of people out there that many would think of as the average person dipping their toes into the world of trading.
This is simply because it is so easy. The information is there to disclose – keep it, and there is no reason why you can’t let trading become a side hustle, if not your primary source of income. But is it easy enough for the average person who doesn’t have thousands to invest? Read on to find out.
Stock Trading Basics
Stock trading is one of the most popular and perhaps the most popular forms of trading. Movies like The Wolf of Wall Street wowed the stock exchange, and they should. There is potential to earn big bucks, the kind of money that makes you trade off your yacht with Bahamas money.
From a layman’s perspective, the stock market consists of exchanges that happen every second the market opens – and the two major stock exchanges in the US are the New York Stock Exchange and the Nasdaq. Buyers and sellers come together, and a market is formed for the specific shares sold. Each exchange tracks supply and demand with a focus on the price of each stock. Buy low and sell high is the motto.
Is it something that ordinary Joe can shine and do? No, it’s complicated and you have to understand the market. Without knowledge, you wouldn’t understand stocks that are at risk of being overbought (they will lose value) or oversold (the value will increase). The link explains the two terms in more detail. You also need to understand the stocks you are interested in investing in and how external factors can affect your trading results. You’ll often hear this referred to as the stock market is going up or down.
Devoted traders spend hours following the markets, using tools to track market trends, and endlessly searching for trading opportunities.
Cryptocurrency trading basics
Cryptocurrency is perhaps one of the most accessible trading opportunities. Apps like Coinbase and eToro have pushed – and changed to some extent – Joe’s normal ability to trade. It’s also fairly easy to understand – but the market moves very quickly.
Some of these apps even alert users when the value of the cryptocurrency they purchased drops in value. As with stock trading, a level of research is required to understand which cryptocurrency is likely to start increasing in value and why. External factors are no less important here.
Recently, Elon Musk tweeted a photo of the new SHIBA puppy, which many took as a hint that the value of the SHIBA cryptocurrency was about to rise. Naturally, people bought into it, and its value increased. It has since seen a sharp decline after Elon admitted that he does not own any SHIBA cryptocurrency.
It differs from stock trading for the average Joe because it is easier to make money on less investment, and apps like Coinbase make it really easy for users to own a crypto wallet and trade all from one app.
This cryptocurrency trading article covers the basics of cryptocurrency trading in more detail and takes a look at different cryptocurrency trading strategies.
Forex Trading Basics
Forex trading is one of the most difficult types of trades for the average joe. It is the process of buying one currency and converting it to another. According to studies, only 7% of individual forex traders are successful. The other percentage lies with companies, banks and financial experts.
With it, you will see multiple news articles; And Instagram accounts tell you that they can make you rich if you join their mention scheme. Signals are a trading term used to describe increases and decreases in the market. Since the market is open 24/7, the volatility is high.
The foreign exchange market is considered by many to be more opaque in that the OTC markets are where foreign exchange is traded, and disclosures are not mandatory. They are large institutional firms that control the market rather than the economic parameters of the country itself – large pools of liquidity from said institutional firms are one of the most pervasive features in the market.
Most traders use brokers to complete forex exchanges simply because of the complexity and fast pace of the market.
Can the average person do that?
The question is, can a normal person do that? If you are interested in dipping your toe into the trading waters – crypto is the best market to start exploring. It is one of the easiest things to understand, and it is relatively easy to make money with a small investment. Stocks and forex require more research and a broker may be needed along with a decent initial investment.
Additionally, as cryptocurrency becomes widely accepted as a convenient currency to buy items, the value is likely to rise in the next few years.
Trade is not for the faint of heart. Trading requires commitment if you want to keep up with the rapidly evolving markets. Despite this, it is still worth exploring if you have ample money that you want to invest.