WHAT is TRADING?
Trading is a new investment modality that has gained a great popularity today thanks to the advancement of technology. It consists of the sale and purchase of listed assets (stocks, currencies and futures). When it comes to the application of a financial strategies, it is to generate a profit (including psychological, economic, accounting and engineering administrative study). This with the aim of creating a strategy in finance.
It is a concept created at the end of the 20th century by Alan Turing and Alonzo Church. They were the first creators of algorithmic trading, defined for using a set of rules that do not involve human emotionality. With this in mind, it allows to avoid common biases among investors, such as:
- Investment with ambiguous character
- Historical comparison.
RELATION BETWEEN TRADING and FINANCE
It is considered that trading works and is identified by the field of finance. That is, investors who operate with a long-term nature of trading act as intermediary agents, being arbitrary operators to expand coverage. With this in mind, they have the objective of generating their own profit. In this manner, the users who are dedicated to this type of market or profession are considered as traders. It is about operators that generate income independently and manage their own capital — even that of third parties.
Consequently, it is associated with the indications of computing, giving rise to the next revolution given in two ways:
- First one. By creating backtesting processes in a domestic order with the same introduction, first through programming and then by specialized software
- Second one. The automation of Financial Exchange through computers, which makes life easier for us by leaving the complexity. Additionally, it allows the possibility of operating from home without having to have a broker to obtain any type of action. This can be acquired by anyone and can be managed in a computer!
ADVANTAGES of TRADING STRATEGIES
- Information on the status or market structure
- Openings and closings
- Minimum suspension limit between quotes.
Normally, an entry is defined by the current price of the financial asset that will be used or by which the algorithm will be generated. On the other hand, the second entry can be the news published in systems such as Bloomberg Live.
Everything above is based on the technical and fundamental analysis applied to a specific strategy to execute operations in the buy-and-sell stock market. When the stock market and the shares are more expensive than the acquired price, it is recommended to sell. On the contrary, it is recommended to buy when the stock market prices are lower.
In the end, your strategy should be a long-term investment where you can make savings for an asset managed from the comfort of your home. Along these lines, a long-term speculation requires of daily dedication to be able to obtain benefits that are obtained in the market in small movements. Of course, this during a good day, because its volatility could put your investment at stake. Nevertheless, if you manage correctly the movements of the market and remain aware, you will have higher chances of gaining profit.
IS TRADING REALLY PROFITABLE?
Trading is the best strategy for the sale and purchase of financial instruments, stock quotes, companies, currencies, and raw materials. This by using an online platform with the best intention of obtaining a good economic return in the short term.
Generally, the best way to carry out an algorithm trading strategy for users’ profit is studying the market and the different products for the strategy:
- Analyze what data is needed on the platform you use.
- Design a good data entry structure,
- Choose a good broker
- Be inspired to set up the best sales and purchase strategy using the application
- Use graphs where you can make a technical analysis to be able to predict future prices, curves and new trends.
- Determine a fundamental analysis and use accounting information of a company for the purpose of evaluating the trend of its price
- Finish with a quantitative analysis which is used to evaluate statistics to predict price movements.
In this strategic and dedicated way, we can become operators or negotiators by ourselves and generate short-term or long-term incomes while being totally independent.