Why do people trade?

Of course to make money! This answer, however, is only partially correct. Different people set different goals for their trading business, and therefore, trading styles and instruments used vary a lot for different traders. Trading is a hobby and entertainment for some people, for others – a source of additional income, for the third – a way to preserve savings from inflation and exchange rate changes, while some made trading in the financial markets their main profession. Furthermore, trading in the financial markets is not the only way to earn money. Before you make a decision and start trading you need to understand the advantages that trading has compare to all other ways of money making.

Reasons for trading

“I need money”

Money is never enough. This is an axiom. It doesn’t even matter how much money a person has, it always not enough. Of course, one might be in need of different things depending on his wealth. There might not be enough money for a new phone or a car, a vacation or a wedding, a flat or a villa abroad, the salary for workers or construction of a new factory. Very often  to realize the dream of  the whole life’s the only thing you need is money. Sometimes you can take a credit, but it will have to be repaid with interest. Once you invest money into financial market trading, you will not pay the interest, but receive it. Certainly, money is necessary to start working on the market. Some might say that they have no spare cash to invest into trading. But think of the opportunities that financial markets open for realization of your wishes, and it might happen that you will refrain from unnecessary purchases and entertainment to obtain a new source of money for you

“I want to save my savings!”

Money loses value every day. Merciless inflation chops a bit off your savings every day, and it doesn’t matter where you keep them – under a pillow or on a bank account, and in what currency – rubles, dollars or euro. Bank deposits offer interest that is lower than the inflation’s rate, even if you freeze your savings for a few years. And what about a risk of hyperinflation? If you were at a conscious age in the beginning of the 90 and lived in Russia, you remember how money depreciated quickly. While the salary was carried from the company cash desk to a shop, you could already buy less goods. Don’t think that now, since we are not in the 90s, we are secure, or that savings in, for example, dollars, will help you to avoid the risk. In a situation of a financial crisis, many countries treat starting up the inflationary mechanism as good way to get rid of a freight of debts. Money must bring profit – and it’s the only way to preserve them.

“Money must work”

Money can bring more money. And if they can, they must do it! Businessmen know this rule well. You don’t think that a billionaire has his billion lying as a dead weight in a bank or in a massive Money Bin like Scrooge McDuck’s, do you? Of course, this billion is invested into several businesses, stocks and other financial instruments, i. e. everything that can bring money. Otherwise a billionaire wouldn’t be a billionaire. And this rule works whatever the size of the fortune. If you are saving up for a car and you have to save up for one more year, invest the existing amount into financial markets and it will help you solve the problem faster. Even if you are not saving up for a car but rather a new iPhone, you can do the same. In modern world trading is available even with small deposits.

Passion

Some traders treat trading like a game of chance. So, “gambling on the stock exchange” is used more often than “working on the stock exchange” justly. Yes, it’s true, trading is a lot like an exciting gambling game. Some traders realize their passion for risks and gamble in trading. However, trading is not poker, roulette, nor is it a casino.  Unlike in gambling, where victory depends on chance and luck, profit in the financial markets depends on the movements of various assets’ rates, which can be predicted.

Trading compare to other types of making money

Trading and a regular job

Trading in the financial markets is just as much of a job as any other. But it has a ton of advantages when compared to a job in an office or a factory. First of all, it is you who sets the work schedule; there is a plenty of assets to trade, and all of them are traded in different stock exchanges around the whole world, in various time zones. If you want to trade on American shares, you can work in the evening, trading on European market can be done in the daytime, while currencies are traded twenty-four hours a day. With sufficient experience and a worked-out trading strategy, trading doesn’t take up much time. It’s enough for you to analyze the market with ready-made techniques, decide on a deal and make  it. Then you will only have to wait to for the result.

Secondly, with modern technology and communication devices you can work anywhere –at home, at a beach and even a train, from any computer, tablet and phone. Not being bound up to a work place gives extraordinary freedom.

Also a job in the financial markets is a job without bosses, so nobody will tell you what to do and ask for the results. Of course, a job like this doesn’t suit those that can’t find satisfying motivation to work for themselves. There are no subordinates on this job as well, so you won’t have to be responsible for anyone. Though if you want, you can hire subordinates. That’s what some professional traders do: they develop the trading system themselves and hire employees (or computer algorithms) to trade.

Trading and own business

Trading is an own business of some sort. You invest money into your own company to gain profit, and risk your capital in case your business-idea turns out to be unsuccessful. Yes, trading in the financial markets is a risk, like any other business. Setting up a stall with groceries next to your house is a risk. It might happen that your potential clients will do their shopping in a supermarket instead, that your salesmen will filch, or some gangsters will burn it up in the night with all the goods. More than 90% of start-ups in small business end up failing, the same thing can happen in trading. But trading, perhaps, is the most available type of business. It is easy to start and easy to roll up in case of a failure.  You risk nothing except the savings on your trade account. Sure, you can lose them, but you won’t have to deal with frustrated clients and enraged creditors. All in all, once again, trading in the financial markets is a risk, bur a reasonable one. And remember no guts, no glory!

Trading and bank deposit, mutual funds, management companies

You can try to earn money by investing into bank deposits, mutual funds, and management companies. All of those are so called ‘passive investments’. However, the interest rate for bank deposits does not even provide protection from the inflation, mutual funds are limited in assets and trading techniques which means they can only bring profit on an actively developing market plus their profit is much lower than that of an independent trader. You can also entrust money to a professional trader or a management company. But in that case you will have to be able to choose the managing director you can trust with your savings. You can run into an amateur that will show you beautiful yield curves but actually lose your money rapidly. To choose a managing director correctly, you should have at least basic knowledge and experience in independent trading and market analysis.

Trading and financial pyramids

Financial pyramids have intensified their activity in the last couple of years. Their advertisements guarantee enormous monthly capital gains without any efforts. It seems everyone knows that any financial pyramid is just a fraudulent scheme that always moves the money of hundreds of people to the hands of a small group of people at the top pyramid levels. Still, there are a lot of people that hope they can leave the pyramid scheme with good profit or are under the illusion that they are at the top of the pyramid. When trading in financial markets (including binary option trading) no one can guarantee any profits. Your income is the result of the trader’s work, his or her knowledge and ability to analyze the market; this income can be big enough if the trader is competent and experienced. You can also have enormous profits if you add your good luck to your knowledge and experience.

The role of trading in the trader’s life

Trading as a hobby or additional earning

Binary option trading does not become a major business for both beginners and experienced traders. Some of them treat trading as their hobby or entertainment that helps to keep your mind off your hard everyday work. Others do trading once in a while when they have some spare money or when they need cash for some major purchase. Many people do regular trading and improve their skills but they usually spend a little money. Still, every trader feels he/she join in financial world of big money. He or she is no more an ordinary engineer or a mid-level manager but a Trader. It’s your own business how you treat trading but we recommend regular trading: you can even withhold trading but you should keep your eye on the market and important economic events to accumulate your experience and knowledge about the market.

Trading as a profession

Lots of traders made trading their major business and income source as soon as they accumulated all the necessary knowledge and experience. We have already mentioned the trader’s work advantages. Many professional traders manage other people’s money having substantial trust funds and receiving the revenue share. Others choose the career of a financial analyst or work in banks and manage hundreds of millions dollars.

Thus, working in financial markets and binary option trading can provide a wide range of opportunities. The way to financial market is a wide avenue with the everlasting green traffic lights. The only thing that can hamper you in this way is your laziness or unwillingness to change anything in your life. So, if you have spent your time on reading this article and managed to understand how trading can change your life, please, don’t miss such a chance, open trading account  or take our training course.