How does trading work?

Trading is an activity that lets you earn money on the price fluctuations of different assets, such as currency pairs, commodities and stocks. There are different ways to place trades (fixed-time trades and Forex), but their methods are similar:

1. Forecast the future dynamics of the price change — up or down.

2. Choose how much money to spend on this forecast (trade).

3. Decide on the timeframe of your trade.

4. Click Up or Down button to open a trade.

You do all this on a trading platform that provides you with live market quotes. When you open a chart, for example, EUR/USD, you can see how the price moved in previous periods and how it’s changing now.

The patterns on the chart and tools available on the trading platform will help you make a more informed trading decision — that is, whether to choose an Up trade or a Down trade.

You can also create a plan on when to trade and how much money to use. This kind of plan is called a trading strategy.

In the picture above, you can see that the price broke the rectangle pattern downwards — it was a signal that the price would go down.

You can increase your deposit in just a few clicks on Olymptrade.

Is trading easy?

Using a trading platform is easy: click the buttons, and open or close trades. The trading itself, however, is not as straightforward.

Let’s go through the common reasons why some people fail in trading.

1. Rushing to open a trade. Prices of financial assets are in constant motion. As a result, you’ll feel a strong urge to open a trade as soon as possible. However, rushing often leads to poor judgment and bad results.

2. Emotional trading. Each trade will either bring you money or take it from you. Unsurprisingly, you’ll feel strong emotions in the process, both positive and negative. Emotions always make it harder to think clearly.

3. Lack of knowledge. There’s a big temptation to trade without learning how to do it properly. While practice and personal experience are important, it’s necessary to gain proper knowledge on how to analyze charts and manage risks.

Next

In the next lesson, you’ll learn what it takes to be a successful trader.