Do you think Tesla stock will go up this year? Will the Japanese yen outperform the US dollar? Or will the price of oil keep rising? You can make a prediction on all of these by trading the markets!
And it’s never been easier thanks to CFD trading apps like Stryk. Curious to learn more? In this article, we’ll explain how to start trading and introduce you to some trading tips for beginners.
What is trading?
In simple terms, trading involves buying and selling financial assets at the right time in an attempt to make a profit. You can trade almost any asset such as stocks, indices, commodities, currencies and cryptocurrencies. Want to learn more about the various assets you can trade? Skip to this article.
CFD trading explained
In the past, trading was only for the wealthy with access to private stock brokers. Nowadays it’s much easier to start trading, partly due to the innovation of CFDs (contract for difference). With CFD trading you don’t actually own the asset, you just trade the price movements. That makes it cheaper and easier to get exposure to the markets. On Stryk, for example, you are trading CFDs. As for the technical explanation, CFDs are financial instruments that track the price of an asset such as a stock or currency. You can read more about CFDs here.
Trading vs investing: what’s the difference?
Traders are usually looking to capitalise on short-term movements and trends. They might hold a trade for minutes, hours, days, or weeks but rarely longer than that. Traders also try to time the market by purchasing and selling at the best times.
Investors, on the other hand, hold their positions for a long time. Years or even decades. They are not actively trading or trying to execute at the perfect timing. They are investing in long-term growth and generally ignore short-term movements.
How to start day-trading
As the name suggests, day-trading is simply trading within the period of a day (known as intraday). Day traders try to capitalise on the small movements of the market and rarely hold positions overnight. It is sometimes referred to as ‘scalping’ when traders trade very small time frames such as minutes.
On the other hand, longer trades (3 days and more) are referred to as ‘swing trades.’ These traders are looking to capitalise on medium-term trends in the market. There are also position trades which is a popular long-term trading strategy that allows individual traders to hold a position for a long period of time, which is usually months or years.
trade up or down
Trading allows you to trade the price movements up or down. This is also known as ‘going long’ or ‘going short’. Learn more about this here.
Multiply your potential gains with leverage
On some trading platforms, you can also increase your potential gains by ‘leveraging’ your trades. This involves borrowing money to multiply your position size. Of course, this is a risky strategy as your potential losses also increase. Learn more about this here.
Start with a demo!
If you’re still unsure about where to start, try a Demo Stryk account. You’ll get £1,000 in demo cash to learn how it all works and gain confidence in your trades. When you’re ready to step it up, you can upgrade to a real money account.