What is trading? Can you really make money from it, or is it just a dream?

If you’ve ever wondered “What is trading?” and whether people can actually profit from buying and selling in the financial markets, this article will answer all your questions. Trading is not long-term investing; it’s short-term buying and selling to capitalize on price volatility.

What is Trading? The Truth

Simply put, what is trading? It is buying and selling financial assets to profit from price differences, whether stocks, currencies, gold, or even indices. Traders are called “traders,” and they try to predict the direction of prices.

When you enter the world of trading, you’ll find many markets to choose from, ranging from major stock indices like S&P 500 and FTSE 100 to forex pairs like Euro-Dollar, US Dollar-Yen. There are also commodities, cryptocurrencies, and gold.

Getting started with trading is easier than you think. You just need to create an account on an online trading platform, select the asset you want to trade, and bet on whether the price will go up or down. Various platforms allow you to buy and sell from home via computer or mobile device.

Can You Make Real Profits from Trading? Let’s Look at the Facts

The main question most people ask is, “Can I really make a profit?” The answer is yes, but it’s not easy.

No strategy guarantees 100% profit in trading. However, if you use well-analyzed methods, have a clear plan, and manage risks properly, your chances of making a profit are higher than losing. Professional traders rely on analyzing various factors such as:

Economic Factors Analysis – Understand current economic trends of the business you’re investing in and what factors might impact it.

Industry Analysis – Look at new trends, current market conditions, growth prospects, and potential changes.

Company Analysis – Understand internal factors of the investment, both qualitative and quantitative, to decide whether to invest or not.

Basic Principles of Trading Every Trader Should Know

No matter what trading style you choose, there are five fundamental principles:

1. Know Yourself First

Before buying stocks to trade, ask yourself why you want to invest. What are your goals? For example:

• Saving money
• Earning extra income while working
• Saving for retirement

Having clear goals makes it easier to choose your trading approach.

2. Study and Understand the Information

Trading is a profession that requires knowledge and capital. Therefore, deep understanding of the market data is essential and should not be overlooked.

3. Learn the Terminology

The trading world has many specialized terms like Leverage, Position, Spread, Stop Loss, etc. Understanding these terms will help you trade more smoothly.

4. Manage Risks Appropriately

This is crucial. Traders should set rules for how much they can handle losing. Decide in advance how much loss is acceptable before stopping. This is called “Stop Loss,” an important risk management tool.

5. Choose a Reliable Platform

There are many trading platforms or brokers, but you should select one that:

• Is regulated by authorities like ASIC (Australia), CIMA (Cayman Islands), or FSC (Mauritius)
• Has reasonable fees
• Offers good customer service, preferably with Thai language support for easy communication

Platforms like Mitrade are designed to be user-friendly, supporting trading in crypto, stocks, indices, CFDs, forex, and offering free demo accounts for practice.

Different Trading Styles

Not all trading is done in minutes. Trading varies based on how long you hold positions:

Day Trading – Fast profits but high risk

Day trading involves buying and selling within the same day, up to a few times per day.

Advantages:

• Profit within the same day, no need to worry about tomorrow’s prices
• High trading volume offers multiple profit opportunities
• No need to stare at the screen all day; can do it alongside a regular job

Disadvantages:

• Prices are volatile and can fluctuate rapidly
• High transaction fees due to frequent trading
• Requires experience and high alertness
• Can incur losses in a single day

Swing Trading – Balancing over a week

Swing trading involves holding positions for a few days or weeks, following market trends.

Advantages:

• Less screen time, suitable for busy people
• Lower fees due to fewer trades

Disadvantages:

• Takes longer to see results
• Requires monitoring market news and updates
• High discipline needed to follow the plan

Long-Term Trading – Holding for months or years

Long-term trading involves holding stocks for months or years, waiting for prices to rise.

Advantages:

• Low stress, no need to watch the market all day
• Can generate passive gains
• Suitable for those with a full-time job
• Reduces risk from daily volatility

Disadvantages:

• Requires patience; sometimes waiting a year or more for results
• Needs broad knowledge of economics and news
• Market trends must be favorable

What to Prepare Before Trading

Understand Different Trading Methods

Stocks – Buying and selling shares of companies. You need to open an account with a broker, a licensed securities firm that connects you to the stock exchange. Stock trading is legal but requires choosing a reputable broker regulated by authorities like ASIC, FCA UK, CySEC.

Popular stocks include Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), Meta Platforms (META), Walmart (WMT).

Cryptocurrencies – Digital currencies like Bitcoin, Ethereum. Trading often involves scalping—buying and selling within minutes or seconds to capture small profits repeatedly.

Forex – Currency trading, e.g., EUR/USD, USD/JPY, GBP/USD. The forex market operates 24 hours, except on holidays. It requires low capital but offers high leverage potential.

Gold – Traded via CFDs, which are speculative contracts on price movements without owning the physical gold.

Design Your Own Trading Strategy

Whatever method you choose, have a clear strategy:

• When to buy
• When to sell
• Where to set Stop Loss
• Profit target

How to Succeed in Trading Without Losing Everything

1. Continuously Learn

Read articles, learn strategies, watch YouTube tutorials. If budget allows, buy trading books. Knowledge increases your chances of success.

2. Practice First

Use demo accounts before risking real money. Platforms like Mitrade offer free demo accounts with virtual funds (e.g., $50,000). Practice strategies and build confidence before trading with real money.

3. Control Your Emotions

Many traders lose money due to emotions like greed, fear, or impatience. Stick to your plan and trade based on logic, not feelings.

4. Invest “Cold Money”

Use funds you can afford to lose—money not needed for living expenses, rent, or education. Trading with essential funds can lead to reckless decisions.

5. Use Stop Loss to Protect Yourself

Set a limit on how much you’re willing to lose and stick to it. Discipline prevents large losses that can wipe out your capital.

6. Choose a Good Platform

For example, Mitrade:

• No commission fees
• Minimum deposit of $50
• Minimum trade size 0.01 lot
• Low spreads
• Regulated by ASIC, CIMA, FSC
• Supports crypto, stocks, indices, CFDs, forex
• Free demo account with $50,000
• New customer bonus of $100

Key Points to Remember

What is trading? It’s about buying and selling assets to profit from price fluctuations. Success depends on proper education, discipline, risk management, and continuous learning.

Always consider risks

Managing risk is more important than avoiding it. Successful traders understand and control their risks effectively.

Leverage is a double-edged sword

Leverage allows you to control larger positions with less capital, increasing potential gains but also amplifying losses. Use it cautiously.

Common Questions

Q: What methods can I use to trade?

A: Mainly through CFDs (Contracts for Difference), which are speculative contracts that allow leverage. They require less capital but carry high risk; you can lose more than your initial deposit.

Q: What is the purpose of trading?

A: To generate income from buying and selling assets like stocks, currencies, gold, or cryptocurrencies. Traders aim for faster returns than long-term investors, often targeting 10-15% annually or even 10% per month.

Q: Is trading dangerous?

A: Yes, it can be very risky if done without proper knowledge. Education, practice, discipline, and a solid plan are essential. Trading is not gambling.

Summary: What is Trading and How to Start

What is trading? It’s buying and selling assets to profit from price volatility. When done correctly—with a plan, discipline, risk management, and continuous learning—you can make real profits.

However, making profits is not easy. It requires understanding the markets and yourself, choosing the right trading style, and remembering that no one can guarantee profits every time.

Start by studying, practicing with a demo account, and progressing gradually. Mistakes will happen, but patience and preparation lead to success.