Interested in Trading? First Understand the Meaning, Types, and disadvantages and advantages

Trading is an activity conducted in the financial markets. This activity is not just a process of buying and selling ordinary goods or services.

The purpose of this economic activity is to trade in a short period of time to get the most profit.

What is Trading?

Reported from investopedia,trading in general is a basic economic concept that includes buying and selling goods and services. The profit from trading activities is derived from compensation paid by a buyer to the seller, or the exchange of goods or services between the two parties.

Trading can not only be done with people from the same country, but also globally called international trade. The international trade market offers fiercer competition. This also has an impact on the creation of more competitive prices.

In the financial concept, trading refers to the process of buying and selling securities, for example stocks. In addition, trading is also often done in the futures market and foreign exchange market or often referred to as forex (foreign exchange). Many people try to trade as an additional income because of its lucrative profits.

Types of Trading

There are several types of trading that are popular with financial activists, namely:

1. Forex trading

Forex trading is foreign exchange trading.

As we know, the value of a foreign currency always goes up and down every certain amount of time. To trade forex type, you can exchange money in money changer directly or online by depositing some money first.

The profit gained from forex trading depends on the exchange value of foreign currencies with the currency we want.

For example, if we buy 10 US dollars today, we have to pay Rp14,000.

When we exchange it in the future, it could be the value of 10 dollars when exchanging it back to rupiah currency to Rp15,000.

Trading this type of forex is considered one that generates huge profits. However, the risk is quite severe.

2. Trading stocks

Be careful not to be confused between stock trading and stock investing. Both do contain the word stock, but the concept is different. Investopedia even calls the two very different things.

Stock trading is the activity of buying and selling stocks for a certain period of time, usually quite short. Meanwhile, stock investments can be concluded as "saving" activities to benefit from long-term stock purchases.

To trade stocks, all you have to do is between selling or buying them when prices fluctuate. Your decision should be right to get capital gains or profit margins, especially when the stock price is soaring.

3. Binary trading

Just like other trades, binary trading activities can not be separated from buying and selling. However, this trade is considered very risky although it can also generate large profits. Often, binary trading is a scam.

Usually, this type of trading is found in horse racing gambling transactions or ball matches. To make this trade, we must set a target and risk some money.  If the target is reached, there will be a huge profit earned. However, if you miss, you will lose.

4. Trade gold

Trading gold cannot be equated with buying and selling, investing, or saving gold.

The way gold investment works is not much different from trading forex and stocks, it's just that the object that is traded in the form of gold.

Gold trading can be done through a broker.

It is important to monitor the price of the US dollar if choosing this type of trading. The reason is that fluctuations in the price of gold are strongly influenced by the value of the dollar and the economic condition of the United States.

5. Trade bitcoin

Since the advent of some time ago, bitcoin trading is one of the newest trading alternatives. The object in this type of trading is of course bitcoin. Bitcoin purchases can be made in rupiah currency.

Don't worry, to be able to trade bitcoin, we don't always need a large amount of capital. Importantly, closely monitor the rise and fall in the price of bitcoin in order to make the right decision.

Trading Advantages

1. Flexible

Trading is preferred because no matter when and wherever you are, it can be done as long as there is access to the internet.

In addition, trading is not a time-consuming activity, so it can be done in between busy without disrupting the top priorities.

2. Practical

Thanks to current technology, you can access trading brokers online. Not only that, there is also an auto trading feature that facilitates the trading process.

Monitoring price fluctuations and determining the price of trading trades is no longer difficult with the feature.

3. Affordable cost and secure data

Although the promised profit is large, it does not mean that it takes a large capital to start trading. Some online brokers do not charge account creation fees and charge commissions and spreads that are not expensive.

Also, by choosing a trusted online broker, you don't have to worry about the security of your personal data to start trading.

2. Practical

Thanks to current technology, you can access trading brokers online. Not only that, there is also an auto trading feature that facilitates the trading process.

Monitoring price fluctuations and determining the price of trading trades is no longer difficult with the feature.

3. Affordable cost and secure data

Although the promised profit is large, it does not mean that it takes a large capital to start trading. Some online brokers do not charge account creation fees and charge commissions and spreads that are not expensive.

Also, by choosing a trusted online broker, you don't have to worry about the security of your personal data to start trading.

4. Demo account for beginners

If you are still in doubt and confused about trading, you can start by trying a demo account that also provides information and guidance on trading strategies.

Trading Risk

In addition to profit, of course there are several things that a trader should be aware of:

1. Large deposit

The services of some trading brokers are accessible without a large fee, and trading can start from a small amount. However, there are also trading brokers that require us to deposit large amounts.

This brings huge profits, but also losses that cannot be underestimated. If you intend to trade, you must be brave to face the risks because no institution or institution guarantees deposits.

2. Mistake of choosing a broker

When looking for an online broker, we could be wrong to choose. There are many brokers to choose from online, the number reaches hundreds to thousands. They offer different advantages.

Traders especially beginners should be really careful and do enough research before choosing to trade with a broker so as not to lose.