Introduction to Investment & Trading
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First of all what is the Difference between Investment and Trading?
Investing:
- Concept: Like planting seeds for the future, investing involves buying assets (e.g., stocks) with the expectation they'll grow over time.
- Example: Buying shares of a promising company for long-term growth.
- Theory: Patience is key; hold onto investments for long-term growth.
Here are a few investment tricks and if you don't understand it now it is fine π
Dollar-Cost Averaging: Invest a fixed amount regularly to reduce the impact of market fluctuations.
Diversification: Spread investments to lower risk; don't put all money in one place.
Dividend Reinvestment: Reinvest dividends to buy more shares and increase future earnings.
Trading:
- Concept: Trading is like buying and selling quickly to profit from short-term price changes.
- Example: Buying a stock today and selling it tomorrow for a quick profit if its price goes up.
- Theory: Make quick trades within a day to capitalize on short-term price movements.
Here are a few trading tricks and if you don't understand it now it is fine π
Stop-Loss Orders: Automatically sell a stock if it drops to a certain price to limit potential losses.
Trailing stop-loss: Sometimes you do not know if you need to go out of a position or not. A trailing stop loss will trigger, NOT at a fixed price, but at a price that is 20% from the position.
So let us say, Gold is at 1950 and you set a trading stop loss at 20$ below price. If Gold goes up to 1970$ / ounce, then stop loss goes up to 1950$. Let's say Gold goes back down, it will auto sell at 1950.
Set Clear Goals and Limits: Decide profit goals and maximum loss before making a trade.
General Tips:
1. Stay Informed: Set up news alerts to stay updated on your investments.
2. Control Your Emotions: Stick to a predefined strategy to avoid emotional decisions.
3. Continuous Learning: Stay curious; keep learning about financial markets for a competitive edge
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