What is Trading in the Stock Market?
Trading can be defined as the mechanism, process or marketplace where the buyers and sellers are used to buy or sell the stock, commodities etc. with the intent of making profits.There are multiple types and styles of trading such as Intraday, Swing, positional, Forex, Commodity and Currency.
Why students should consider trading?
1. Financial Literacy: Trading helps students to build their financial literacy because it exposes the students to real-world financial concepts, and market dynamics, enhancing their knowledge of economy, business and finance. It help them to make well-informed financial decisions throughout their life.2. Early Start in Wealth Building: Starting at an early age can help the student gain the benefits of compounding, even small but regular investments can create major results over some time, that is why it is advised to start as early as possible. Do you know how Warren Buffet has created such a major wealth? it's because he started investing when he was just 12 years old.
3. Practical Experience: Trading leads us to make real-time decisions based on current market conditions, news and data, it simulates a pressure-like situation in which we have to use our skills to deal with it, and this skill helps them in other professions.
4. Risk Management Skills: Trading also comes with a lot of risks, there is a risk of losing capital that traders have to manage with proper risk management strategy and here traders learn risk management skills.
5. Enhanced Analytical Skills: To make a proper trade, traders have to analyze multiple things such as candlesticks, chart patterns, indicators and market trends, this will improve the analytical skills of students.
6. Entrepreneurial Mindset: To become a successful trader, traders have to learn the skills of making decisions under pressure, taking risks, managing emmotions, analyzing the market, and making plans and strategies all these skills are essential to become entrepreneurs.
7. Enhanced Career Opportunities: Trading teaches us skills like analytical thinking, risk management, decision-making under pressure, patience, self-discipline and the ability to continuously learn this allows us to enter the finance, insurance and corporate sector easily.
8. Self-Discipline and Patience: Traders are well known for the importance of self-discipline and patience in trading because if there is no self-discipline and patience in a trader routine then there is a significant threat to their capital and this is how trading teaches self-discipline and patience.
Problems, students face in trading and solutions:
1. Limited Capital: Being a student, there is no access to a regular source of income which significantly impacts their performance in diversifying their investments in most of the vulnerable and volatile market situations and losses. Initially, everyone has to face losses in trading due to inexperience and with limited capital it becomes difficult for students to setbacks from the losses in the market because they don't have enough capital to trade again.
Solution: Initially, not every trade is going to be profitable therefore we need a regular source of income to recover the losses, now the question is how we can make a regular stream of income. see, in today's digitalized world it is easy to make money online, there are multiple freelancing works that are easy to learn and the platform where you can provide your services. When you have some spare time instead of your study time then you can utilise it in freelancing to make some extra money which you can use in trading.
2. Lack of Knowledge: Without proper knowledge of market fundamentals students are going to make the wrong decision about trades, they might even chose inappropriate stocks based on rumors rather than solid analysis. This can lead to significant financial looses and missed opportunities for good trades.
Solution: Understand the fundamentals of trading, be familiar with important trading concepts, learn the basics of technical analysis, give at least 5-6 months to clear the basics and then enter the market with little capital.
3. Time Constraints: One of the major problems with students is time management, they think that they don't get enough time out of study to learn some extracurricular activity such as trading.
Solution: In this scenario, students themselves have to manage their time, they can use multiple time management techniques to utilize time effectively and can save some free time so that they can give it to trading.
4. Emotional Management: As a student, we are not at a high maturity level that is why we cannot eliminate our emotions from decision-making, although they can be minimized but cannot be eliminated therefore there would be chances of making some wrong decisions.
Solution: Develop a trading plan and stick to it, practice discipline effectively and most importantly adhere to your stop-loss these are some useful techniques that you can follow to make appropriate decisions in trading.
As we discussed earlier, being students we need a regular income flow that is why we have considered freelancing with trading but it becomes more difficult for students without impacting their academic performance so here are some effective tips and techniques that can help in managing trading, earning as well as academics effectively.
1. Create a Structured Schedule: Create a schedule where you can allocate a specific time block to academics, freelancing and trading, make sure that academics are given the highest priority.
2.. Collaborative Freelancing: You can ask for your friend's help in freelancing, for instance, if you have decided to become a content writer as a freelancer then you can allocate the research and outline preparation like tasks to your friend based on a certain margin in reward.
3. Freelance in Trading-Related Areas: There are multiple freelancing areas related to finance, investing and trading such as content writing for others related to finance, trading and investing or even you can start your own blog where you can explain the concepts of trading and investing this is how you can minimize the tasks and maximize the learnings.
4. Trading Simulators and Apps: If you are preparing for any competitive exam which requires more focus and time to study and you don't have as much time to give for freelancing as well as trading then you can focus on learning trades and practicing your learnings with trading simulator apps or also called paper trading, it will provide you the real experience of trading with virtual money. In that case you don't need to freelance for money.
How students can step up their learning of trading:
There are multiple YouTube channels, articles and books as well as there are platforms like udemy, Coursera etc. which provide the courses on basics of finance, the stock market, investing and trading etc. which you can go for, at least to create momentum in your trading journey. Once you have built the fundamentals then you can also prefer paid courses if you can afford them, otherwise, YouTube could be the best source to learn to trade.Conclusion: Trading in the stock market is not just about making profits, it teaches multiple things to traders like risk management, planning, effective decision-making, and risk tolerance skills and also helps to develop an entrepreneurial mindset which later helps the trader in other professions and also in their personal life as well. It becomes difficult to consider trading while pursuing college or higher education, but the important thing is that once you have developed a strong command over the fundamentals of trading with a clear, healthy mindset and patience you can create an unbelievable outcome out of trading.
FAQ's
Can I start trading as a student?
-Yes, there is no certain age limit to start trading, but it is advised for students to learn the fundamentals thoroughly and then only enter the market.
Can I earn 500 daily by trading?
-Yes, It is possible to make 500 daily even with less volatility in the market but it depends on various factors such as your expertise, strategies capital etc.
Is trading a good career?
- Trading can be a good career option for the right person but it is important to understand the challenges and requirements of it.
What is the best type of trading for students?
Can I earn 500 daily by trading?
-Yes, It is possible to make 500 daily even with less volatility in the market but it depends on various factors such as your expertise, strategies capital etc.
Is trading a good career?
- Trading can be a good career option for the right person but it is important to understand the challenges and requirements of it.
What is the best type of trading for students?
- For students, the best types of trading could be that which provide more flexibility in time so that they can utilize it to study, therefore they can have a look at swing trading, positional trading etc.
