Trading is everywhere you look. From the hopeful forex trading, Instagram accounts that follow you every week, to the countless affiliate ads showing you the next best trading app – it’s hard to escape the lures of trading. Whether it’s a cryptocurrency, forex, or stock, there are plenty of people that many would consider being the average Joe dipping their toes into the trading world.
That’s simply because it’s so easy. The information is out there to divulge – retain it, and there’s no reason you can’t let trading become a side hustle, if not your primary source of income. But is it easy enough for the average Joe without thousands to invest? Read on to find out.
The Basics Of Stock Trading
Trading stocks is one of the most popular – and possibly one of the most well-known – forms of trading. Movies like The Wolf of Wall Street glamorized stock market trading, and so they should. There’s the potential to make the big bucks, the type of money that has you trading from your yacht in the Bahamas money.
In layman’s terms, the stock market comprises exchanges happening every second the market is open – the two main stock exchange markets in the US are the New York Stock Exchange and Nasdaq. Buyers and sellers come together, and a market for the specific stocks sold comes into formation. Each exchange tracks supply and demand focusing on the price of each stock. Buy low and sell high is the motto.
Is it something the average Joe can rock up and do? No, it’s complex, and you have to understand the market. Without knowledge, you won’t understand what stocks are at risk of being overbought (they’ll lose value) or oversold (the value will increase). The link explains the two terms in greater detail. You also need to understand the stocks you’re interested in investing in and how external factors may influence trading results. You’ll often hear this being referred to as the stock market is up or down.
Devoted traders spend hours following the markets, using tools to track market trends, and research endlessly to find trading opportunities.
The Basics Of Trading Cryptocurrency
Cryptocurrency is perhaps one of the most accessible trading opportunities. Apps like Coinbase and eToro have propelled – and somewhat transformed – the average Joe’s ability to trade. It’s also somewhat easier to understand – but the market moves very quickly.
Some of these apps even alert users when crypto they’ve bought drops in value. As with trading stocks, there is a level of research required to understand what crypto is likely to start increasing in value and why. External factors are just as important here.
Recently, Elon Musk tweeted a picture of his new SHIBA puppy, which many considered a hint that the cryptocurrency SHIBA was about to sky-rocket in value. Naturally, people bought into it, and the value of it increased. It has since taken a sharp decrease after Elon admitted he didn’t own any SHIBA crypto.
It differs from trading stocks for the average Joe because it’s easier to make money from a lower investment, and apps like Coinbase make it really easy for users to have a crypto wallet and trade all from one app.
This crypto trading for dummies article goes into the basics of trading crypto in more detail and looks at the various crypto trading strategies.
The Basics Of Trading Forex
Trading forex is one of the most tricky types of trades to pull off for the average Joe. It’s the process of buying one currency and changing it into another. According to studies, only 7% of individual forex traders are successful. The other percentage lies with businesses, banks, and financial experts.
Still, you’ll see multiple news articles; and Instagram accounts telling you they can make you rich if you join their signals scheme. Signals is a trading term used to describe increases and decreases in the market. As the market is open 24/7, the fluctuation is massive.
Many consider the foreign exchange market to be more opaque in regards to the over-the-counter markets being the trading spot for forex, and disclosures aren’t mandatory. It’s large institutional firms that control the market rather than the economic parameters of the country itself – and large liquidity pools from said institutional firms are one of the most prevalent features of the market.
Most traders use brokers to complete forex exchanges simply because of the complexity and the fast-moving pace of the market.
Can The Average Joe Do It?
The question is, can the average Joe do it? If you’re interested in dipping your toe into the trading waters – crypto is the best market to start exploring. It’s one of the easier ones to understand, and it’s relatively easy to make money with a small investment. Stock and forex require much more research and potentially the need for a broker along with a decent initial investment.
Plus, as crypto is becoming more widely accepted as a currency suitable for buying items, the value will likely soar in the next few years.
Trading is not for the faint-hearted. Trading takes commitment if you wish to keep up with the rapidly evolving markets. Despite this, it is still worth exploring if you have spare money you want to invest.