Not only is making money from the financial markets incredibly hard, but the figures also suggest that it’s quite rare.
For example, it’s thought that at least 70% of all forex traders lose money over time, while some estimates put this figure as high as 95% in certain instances.
In this post, we’ll discuss the best investment and trading methods for making money, from buy-and-hold strategies to forex strategies such as scalping.
What Types of Trading Are There?
Let’s start with the basics; perhaps the most popular interaction of trading in the financial market is forex.
The forex market may also be described as the foreign exchange, which sees the buying, selling and exchange of international currency pairs. Often, they’re traded as derivative assets, allowing for speculation investment that doesn’t require you to take ownership of the underlying asset.
To trade forex successfully, investors will need a licensed and secure platform through which to analyse price movements and execute trades, prioritising those that are secure and have the requisite number of technical indicators and analytical tools.
Options such as the MetaTrader 4 and the MT5 are ideal for forex trading, with the latter offering complete Depth of Market (DoM) data and also offering access to a wider range of asset classes as you look to diversify over time.
Options and futures trading are also popular, with the former affording a trader the right, but not the obligation, to buy or sell shares at a specific price and time in the future (so long as the contract is in effect).
By contrast, a futures contract formally requires a buyer to buy shares (and a vendor to sell them) on a predetermined date in the future.
Both trading vehicles are speculative in their nature, while they offer flexibility in terms of whether traders want to generate a direct profit or hedge existing investments.
These vehicles are commonly used to freely trade assets such as stocks and commodities, which can also be accessed seamlessly through platforms like the MT5.
What Iterations of Investment Exist?
We spoke earlier about classic buy-and-hold strategies, which are synonymous with investment rather than trading as they compel individuals to assume ownership of the underlying financial instrument for a concerted period of time.
As the name suggests, a buy-and-hold strategy will see you procure stocks and shares and retain these as they appreciate in value, before looking to sell them and realise an optimal profit using market analysis.
Often, investors will combine this type of tangible and cumulative stock trading with fixed-income products such as bonds, particularly those that are secure and have been issued by a national government.
Such products deliver incremental returns and help to stabilise your portfolio, while you look to optimise profits through shares and equities.
Typically, a younger investor’s portfolio will comprise 60% stocks and 40% bonds, with this offering balance, security and viable gains in equal measure.
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