Stock Trading: A Beginner's Guide

Trading financial instruments has become more accessible than ever with modern platforms and abundant information sources. However, the journey can feel overwhelming for beginners. This guide will help clarify the essential concepts and strategies critical for successful trading.

What is stock trading?

Stock trading involves buying and selling shares of companies in the financial markets. Each share represents a share of ownership in a company and can be bought and sold through stock exchanges. There are two types of positions that traders take:

• long positions – buying shares with the expectation that the price will increase;

• short positions – taking advantage when the price is decreasing. You're basically borrowing shares from a broker, selling them at the current price, and then buying them back at a lower price, keeping the difference.

These trades are made through stock exchanges such as the New York Stock Exchange (NYSE) or NASDAQ. By using the brokerage platforms, you get access to these exchanges, where you can buy and sell shares.

How to start trading stocks?

Trading requires knowledge and practice. Here are some steps to help you prepare for your first trades:

• demo account practice – before investing real money, it's essential to practice on virtual trading platforms that allow you to simulate real trades using virtual funds. This is an excellent way to grasp how the market operates without any risk;

• learning the basic terminology – understanding key terms is essential to effective trading;

• journaling each trade – keeping notes on each trade will help you analyze your mistakes. By analyzing the results, you will be able to understand which strategies are working and what needs to be improved.

Following these guidelines will set you up for successful trading.

The difference between short-term and long-term trading

Trading in financial instruments can be categorized as short-term or long-term, depending on your objectives and strategy. What are the two types?

• Short-term trading - It involves buying and selling within days or even minutes. Day trading is one of the most common types of short-term trading, where traders try to extract profits from small price fluctuations;

• Long-term trading (Investing) - This is the more relaxed approach to the market where you buy stocks and hold them for months or years. Long-term traders rely on fundamental analysis to assess a company's prospects.

Whether you choose short-term trading or long-term investing, success depends on understanding the market and constantly working on your skills.

Technical and Fundamental analysis: Core methods for valuing stocks

One of the keys to successful trading is being able to value stocks correctly. There are two main evaluation methods. These are:

• Technical analysis - This method involves studying the price movements of instruments. Technical analysis uses charts and indicators. Price history can provide information about future stock behavior;

• Fundamental analysis - Fundamental analysis focuses on the intrinsic value of the company. It includes a review of the company's financial statements, balance sheet, and earnings. Market trends and company management are also taken into account. 

Stock trading requires persistence and discipline. It is recommended for beginners to start with a demo account and thus familiarize themselves with the basic concepts and strategies without risking real funds. Following the guidelines in this guide will help you build good habits and increase your chances of winning.