Financial market trading is a thrilling and potentially rewarding experience, but it demands skill, strategy, and discipline. Most newcomers enter trading with a lot of hopes and dreams only to end up with losses due to ignorance and lack of preparation. If you wish to trade like a pro, you have to find a methodical approach that efficiently manages risk and reward.
In this exhaustive guide, we will guide you through the basics of becoming a professional trader if you wish to
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1. Knowing The Basics Of Trading
To dive into strategy and technique, you first need to know what trading is all about.
What is Trading?
Trading is the process of buying and selling financial instruments like stocks, forex, commodities, and cryptocurrencies to earn profits. The core of trading revolves around taking advantage of price fluctuations in financial markets through different types of trading strategies with different time frames, risk management techniques, and objectives.. However, it’s important to stress that trading can be complex, and not all traders make profits. Successful trading requires skill, knowledge, and often experience to manage risk effectively.
Financial Market Types
- Stock Market: Sale and purchase of shares of public companies.
- Forex Market: Exchange of currencies against other currencies, for example, USD/INR or EUR/USD.
- Commodities Market: Purchase and sale of raw materials such as gold, oil, and agricultural products.
- Cryptocurrency Market: Selling and purchasing digital currencies such as Bitcoin and Ethereum.
- Derivatives Market: Exchanging contracts such as CFDs, options and futures on underlying assets.
Why Trade Forex in India?
Forex trading is gaining popularity in India due to its 24-hour market availability, high liquidity, and potential for significant profits. However, forex trading in India is regulated by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). Only currency pairs approved by Indian regulators, such as USD/INR, EUR/INR, GBP/INR, and JPY/INR, can be legally traded on recognized exchanges like NSE and BSE.
2. Building A Trader’s Psychology
Professional traders step into the markets with a disciplined psychology, recognizing that trading is a skill that gets better with practice.
Emotional Discipline and Control
Successful traders maintain control over emotions such as greed and fear. Rather than acting on impulse, they adhere to a well-laid-out trading plan.
Patience and Consistency
Successful trading involves patience. Novices fall into the trap of overtrading or hoping for short-term profits. Professional traders are interested in consistency, not instant rewards.
Ongoing Learning
Markets change every day, and professional traders keep themselves updated with…