What is Trading?

by | Sep 3, 2023

If I could sum up what trading is in its entirety in one word.

It would have to be one big…

Auction.

In a nutshell, it is the practice of buying and selling financial assets in various markets with the goal of realizing a profit, regardless of whether the market is moving up or down.

You can make money only when asset prices rise (a strategy known as buying or  “going long”) but also when prices fall (a strategy known as selling or “going short”).

In this article, I want to try sum up what trading is in a way that you will see it in a new light.

Let’s start.

  1. TRADING IS A Process

Trading involves the systematic buying and selling of financial assets and derivatives, such as CFDs, Futures, Spread, EFTs or options.

You can trade different markets, such as stocks, Forex, indices, commodities, bonds or even a combination of both.

The aim is to make a probability prediction which direction, the market is more likely to head with the aim of making a profit.

This process demands careful analysis, strategy development, and disciplined execution.

  1. TRADING IS A Lifestyle

For some, trading isn’t just a job.

It’s a lifestyle that starts off with motivation, moves into disciple and then into integration.

This integrated element, offers the freedom to work from anywhere in the world and the opportunity to manage one’s financial destiny.

However, this lifestyle also comes with inevitable challenges and risks.

And so you’ll always need to include continuous learning, discipline, and risk management.

  1. TRADING IS A Game

Trading can be seen as a game, albeit a serious one.

Your hard earned money is involved and so you’ll need to make careful calculated moves and decisions.

And because trading is an ever-changing environment, you always need to improve, adapt, adopt and evolve your skills, strategies and tools.

The game is all about growing your portfolio by buying and selling different markets and having a sniper type approach to spotting high probability moves.

  1. TRADING IS A Business

Many traders treat trading as a business.

There are many elements you need to incorporate as if you’re running an organisation.

You need to establish your trading plans, timing, set goals, manage budgets, and you need to record and analyse your performance.

Some months will be positive, others negatives.

The onus is on you to make sure:

  • The losses are small.

  • The winners are larger.

  • The drawdowns are managed accordingly.

  • Your emotions are in check.

  • Your strategy is still profitable and performing well.

You need t approach trading with a professional mindset and a commitment to long-term success.

  1. TRADING IS A lonely journey

YOUR success is entirely dependent on YOUR actions and decisions.

It won’t yield results if you seek advice from family, friends, pets, or even strangers about what to buy or sell.

It won’t work if you rely on the opinions of random billionaire analysts on Bloomberg or scroll through Facebook for trading predictions, including my own.

No, with your system, your money, and your time, you must trade independently and on your own terms. What truly leads to profitability?

Taking more trades based on YOUR criteria.

Adhering to YOUR rules in line with YOUR strategy.

Dedicating more of YOUR time to enhancing your trade execution.

Notice the emphasis on “YOUR.” It’s not about others, not about him or her – it’s about YOU. So, embrace trading for what it is and savour the journey.

  1. TRADING IS about Risk and Reward

Remember that with every trade you take (during winning and losing streaks).

Trading involves a continuous assessment of risk and reward.

You need to know how to handle your winners and adjust your risk management according.

When things are going well, stick to your rules and don’t get a big head.

When things are going bad, stick to your rules and know when to lower the risk or halt trading.

Traders must weigh potential profits against potential losses.

  1. TRADING IS NOT a full time job

Yes you need to trade a couple of hours a week.

But you do not need to see it as a 9 to 5 job.

In fact, the more hours you are trading and glued to the screen – the more dangerous trading can be for your portfolio.

In fact,

You don’t need a lot of time (half an hour to one hour a week will do just fine).

You don’t need a lot of effort. (Just a few click of the buttons and a few simple grade-8 maths calculations).

You don’t need to worry and stress yourself out. (Opportunities come every day, you can manage your own risk and no one is watching over your shoulder.)

In other words this is one opportunity which will give you:

More free time, less work and a hobby that will consistently pay you.

  1. TRADING IS asset diversity

The world is your trading oyster.

You need to allow for the right diversification.

If you stick to one market (during sideways or slow ranges) – you will not grow your portfolio.

So make sure you diverse your accounts and various markets.

Maybe include different stocks, Forex, indices, cryptocurrencies, and commodities.

FINAL WORDS:

Trading is not just about buying and selling assets.

It encompasses a wide range of skills, mindsets, and strategies.

It can be a journey filled with both triumphs and setbacks.

You need to take into account of the different markets, methods, money and mind elements to gain the advantage of financial independence.

Let’s sum up what trading is…

  1. TRADING IS A Process

  2. TRADING IS A Lifestyle

  3. TRADING IS A Game

  4. TRADING IS A Business

  5. TRADING IS A lonely journey

  6. TRADING IS about Risk and Reward

  7. TRADING IS NOT a full time job

  8. TRADING IS asset diversity

What is trading to you? Let me know.

Trade well, live free.

Timon Rossolimos
Founder, MATI Trader

 

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Timon Rossolimos

Founder, MATI Trader

 

 

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