The online trader works from home, buying and selling stocks and financial stocks. He works according to his schedule and according to his wishes – with an activity that can be carried out from a few minutes a day up to several hours. The freedom and good earnings potential of this remote work has made it very popular. There is good news: anyone can do it, even those with no finance experience.
A degree is not necessary to pursue this career, but if you want to get to know this world and start from an academic path, the most suitable degrees are those in Economics, Mathematics and Statistical Sciences. Conversely, if you don't intend to enroll in university, you can opt for books and courses that focus on the knowledge and functioning of the markets and all subjects closely related to finance, economics and politics.
Here is a list of what they recommend studying to become a trader
Financial markets: studying the markets in which you want to operate is one of the fundamental steps to understand how they work. Everything that happens on the stock markets also affects other markets, such as the commodity market for example; for this reason, studying well what is happening is important to understand how that specific trend could have repercussions on other sectors.
Technical analysis: it is used to analyze the numerical quantities concerning a security, to better understand how it will move on the market.
Fundamental analysis: it concerns the analysis of the microeconomic and macroeconomic part and is used to understand how these news are influential on the performance of the markets.
Analysis tools for trading: indicators, oscillators, supports, are all essential tools to learn what to do when certain situations arise and to increase the precision with which some predictions are made.
In addition to these practical notions, to become a trader starting from scratch you must have: a lot of patience, perseverance and courage to take risks. Not everyone is inclined to do this job as you need a certain propensity for risk and an economic base from which to start. If you are not willing to lose and risk, the trader's job is not for you.
The trader can choose from a wide range of options on which to specialize: stocks, index, forex, CFD. We are going to focus on CFD trading in the next paragaph.
What is a Contract for Difference (CFD)?
A contract for difference (CFD) is a popular type of derivative instrument in finance. Derivatives are contracts with a time limit whose value “comes” from the performance of an asset on the market. This guide summarizes everything you need to know about trading CFDs, explained in simple terms.
So what is meant by CFD in the context of trading? CFDs allow you to speculate on a variety of financial markets, including stocks, indices, commodities, currency pairs and cryptocurrencies. Assets are never bought, but traded for their price to rise or fall, usually over a short period of time.
A CFD is a contract between a broker and a trader who agree to exchange the difference in value of an underlying security that accrues in the period between the start of the contract and the end of the contract, often less than 24 hours.
How does CFD trading work?
When you open a contract for difference (CFD) position, you select the number of contracts (the size of the deal) you want to buy or sell. Earnings earned will increase by the same amount as each point the market moves in your favour.
Buy
If you think the price of an asset will increase, you enter a long position (Buy) and make a profit if the price of the asset grows as expected.
Sell
If you think the price of an asset will fall, then you open a short position (Sell) and make a profit if the price of the asset falls according to your estimates.
Conclusions
CFD trading is ideal for investors who want to increase their returns.
However, it carries significant capital risk and is not suitable for everyone. We strongly recommend trading with a demo account before starting with real money.
CFD trading can be the ideal tool for the following categories of potential investors:
Those looking for short-term opportunities:
CFDs are generally kept open for no more than a few days or weeks.
For those who want to make their own investment decisions:
Libertex only provides brokerage services. We will therefore not advise you on which options to trade and will not trade on your behalf.
For those looking to diversify their portfolio:
Libertex's trading offering includes assets on over 5,000 global markets and includes stocks, commodities, currencies and indices
Our CFD service covers a wide range of asset classes. You can find more information on CFD trading fees here. CFDs are flexible investment vehicles. As contracts with no expiration date, you decide when you want to close your position and realize your profits or losses.
We hope this article has been helpful to you. You can open a free demo account as soon as you feel ready to try trading CFDs on your own.
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