What is trading, and can you really make money from it?

If you have just started to be interested in finance and want to know what is trading, the answer is that it is a financial activity involving buying and selling assets to generate returns. This article will help you understand the structure of financial markets, potential risks, and the best ways to start trading so you can invest wisely.

Basic Trading: Know Before You Start

Simply put, trading means buying and selling financial assets to profit from price differences. The assets that can be traded are very diverse, including stocks of large companies, foreign currencies, cryptocurrencies, and commodities.

What makes trading different from long-term investing is the frequency of transactions. Traders often buy and sell in very short periods to profit from price changes that occur over time.

For example, you might notice that asset prices constantly fluctuate based on various global events, such as economic news, interest rate changes, or political events. Traders use this understanding to predict price directions.

3 Main Trading Strategies Every Investor Should Know

1. Day Trading: Profiting Within a Day

This method involves buying and selling assets within the same day. Day traders often make multiple trades in one day, aiming to enter and exit quickly.

Advantages:

• ✅ Receive quick returns within the same day
• ✅ High trading volume with significant profit margins per trade
• ✅ No need to hold long-term positions

Disadvantages:

• ❎ High volatility increases risk
• ❎ High transaction costs due to frequent trading
• ❎ Requires high experience and focus
• ❎ Can lead to rapid losses in a single day

2. Swing Trading: Medium-Term Profits in 2-3 Weeks

This style involves holding positions for 2-3 days or even several weeks to profit from medium-term price movements. The profit margin (swing) can be 10-100 times greater than day trading.

Advantages:

• ✅ Less screen time compared to day trading
• ✅ Suitable for those with a full-time job
• ✅ Lower costs because trades are less frequent

Disadvantages:

• ❎ Requires continuous market monitoring, though less than day trading
• ❎ Needs discipline and strict adherence to strategies
• ❎ Not suitable for impatient traders seeking immediate results

3. Long-Term Trading: Saving for the Future

This involves holding assets for months, years, or even longer. Investors believe prices will rise over the long term and wait to realize profits.

Advantages:

• ✅ Less stressful, no need to watch the screen all day
• ✅ Greater profit opportunities as markets tend to grow over time
• ✅ Reduced risk due to time allowing markets to recover
• ✅ Can work full-time while trading

Disadvantages:

• ❎ Requires patience and long waiting periods
• ❎ Needs to follow economic news and price factors
• ❎ Not suitable for those needing quick cash

5 Key Steps Before You Start Trading

1. Assess Yourself and Your Goals

Before investing any money, think carefully about why you want to trade. Do you want short-term gains? Save for exams? Or build long-term assets for retirement? Knowing your purpose helps choose the right trading approach.

2. Study Knowledge and Fundamentals

Trading is not just guessing. Read articles, books, or courses about trading. Learn about markets, different assets, and analysis methods.

3. Learn Trading Terminology

Terms like Leverage, Margin, Stop Loss, Take Profit are essential. Understanding these will help you communicate with brokers and understand trading processes smoothly.

4. Risk Management First

Set rules for how much you are willing to lose per trade. Generally, professional traders risk 1-2% of their total capital per trade. For example, if you have $1,000, risking $10-$20 per trade is advisable.

5. Choose a Reliable and Suitable Broker

A broker is a company that acts as an intermediary for trading. Choose one that:

• Is licensed by regulatory authorities such as ASIC (Australia), CIMA (Cayman Islands), or FSC (Mauritius)
• Has reasonable fees
• Offers good customer service and supports Thai language
• Provides an easy-to-use trading platform

Select the Right Platform and Broker

Once you decide to trade, pick a platform. Today, many websites and apps are available, but the best ones:

• Make trading easy
• Offer a variety of instruments (stocks, cryptocurrencies, Forex, CFDs, gold, etc.)
• Have low or zero fees
• Allow easy deposits and withdrawals

An example popular among CFD traders worldwide is Mitrade, which is licensed by ASIC, CIMA, and FSC. Its highlights include:

• Zero commission and low spreads
• Minimum deposit of only $50
• Minimum trade size of 0.01 lots
• Convenient bank deposits/withdrawals in Thailand
• Free demo account with $50,000 for practice

Popular Trading Markets: Stocks, Cryptocurrencies, Forex, and Gold

Stock Trading: Get to Know First

Stock trading involves buying and selling shares of listed companies on stock exchanges. To trade stocks, you need to open an account with a licensed broker.

Can you make real profits? Yes, because the stock market tends to grow over the long term. Although there are short-term dips, markets usually recover and surpass previous highs. Some stocks also pay dividends, providing additional income.

Popular high-value stocks include:

• Microsoft (MSFT): Market cap $3.2 trillion
• Apple (AAPL): Market cap $3.0 trillion
• Amazon (AMZN): Market cap $1.8 trillion
• Alphabet (GOOG): Market cap $2.0 trillion
• Meta Platforms Inc (META): Market cap $1.2 trillion

Cryptocurrency Trading: Digital Currencies

Cryptocurrencies are digital, intangible currencies created for exchanging goods and services. Their value depends on user demand.

The most popular crypto trading method is Scalping, which is very short-term. Scalpers enter and exit positions within minutes or seconds to profit from tiny price changes, often holding dozens or hundreds of positions simultaneously.

Forex Trading: Currency Exchange

Forex, or Foreign Exchange, involves trading different currencies or currency pairs. The Forex market is the largest financial market globally, open 24 hours (except weekends and holidays).

Advantages:

• ✅ Low capital requirement
• ✅ Ability to use leverage for higher profits
• ✅ High liquidity

Disadvantages:

• ❎ Leverage can also lead to significant losses

Popular currency pairs with high liquidity:

• EUR/USD (Euro - US Dollar)
• USD/JPY (US Dollar - Japanese Yen)
• GBP/USD (Pound Sterling - US Dollar)
• AUD/USD (Australian Dollar - US Dollar)

Gold Trading: Safe Asset

Gold is considered a very safe asset with low volatility. Gold trading typically uses CFDs, reflecting gold prices without owning the physical metal.

Advantages of CFD gold trading:

• ✅ No need to physically hold gold
• ✅ Low investment amount
• ✅ Profit from both rising and falling prices
• ✅ High leverage for greater returns

Path to Success in Trading

1. Continuously Learn and Improve

Trading has no end date for learning. Markets constantly change, so:

• Read trusted articles and guides
• Buy books on trading and investing
• Follow economic news

2. Practice with a Demo Account

Before risking real money, practice with virtual funds. Mitrade’s demo account offers $50,000 for free. It’s the best way to learn strategies in a real trading environment without risking actual money.

3. Control Emotions

Greed and fear are traders’ biggest enemies:

• Don’t let greed drive decisions
• Avoid trading when emotional
• Stick to your rules

4. Be Consistent and Disciplined

Even if you lose today, tomorrow is a new opportunity. Key points:

• Don’t give up after losses
• Maintain risk management discipline
• Learn from each loss

5. Remember Trading Is Risky

No one can guarantee 100% profits. The important things are:

• Use “cold” money (funds not needed for daily expenses)
• Follow risk management rules
• Never invest money you need urgently

Common Questions About Trading

Can I profit from CFD trading?

Yes, but understand that CFDs (Contracts For Difference) reflect the price of underlying assets. You can profit from both rising and falling prices and use leverage to amplify gains. However, leverage can also lead to larger losses than your initial investment.

What is the purpose of trading?

The purpose varies:

• Some see it as a profession
• Others as a way to generate extra income
• Some use it as a savings method for the future The main goal is to generate financial returns from price changes.

Is it really profitable?

Yes, but it requires:

• Knowledge and experience
• Good strategies
• Strict risk management
• Discipline

How much money should I start with?

There’s no fixed amount. Platforms like Mitrade require only $50 to start. It’s recommended to begin with an amount you’re willing to lose and increase gradually as you gain experience.