Beginner to Pro Trading: Is it Profitable? Learn the Correct Trading Methods

What is Spot Trading? Understand Clearly

Spot trading is the buying and selling of financial assets to profit from price differences. It involves transactions that often occur frequently in financial markets, whether trading stocks, commodities, foreign currencies, or even digital assets.

Assets that can be traded on the spot include a wide variety, from global stock indices like S&P 500 and FTSE 100 to major currencies such as the US dollar and Japanese yen, or even commodities. To start spot trading, you need to open an account on a trading platform, select the asset type you want, and begin predicting price directions.

Basic Principles of Spot Trading: Risks and Opportunities

The general principle of spot trading is short-term trading to profit from price volatility. However, no strategy guarantees 100% profit.

But if you use well-analyzed strategies and plan your investments clearly, your chances of making a profit are higher than the chances of loss. The key is thorough analysis.

Essential Analysis Methods You Need to Know

1. Economic Analysis (Economic Analysis)
Traders must understand current economic trends and identify factors that impact industries and assets they plan to invest in.

2. Industry Analysis (Industry Analysis)
Look at the trends of new products replacing old ones, analyze market conditions, and assess future growth prospects.

3. Company Analysis (Company Analysis)
Analyze internal factors in detail, both qualitative and quantitative, to decide whether to invest in that asset.

5 Things to Know Before Starting Spot Trading

1. Self-Assessment

Ask yourself why you want to invest to find a suitable investment style for your goals:

• Save and invest for the future
• Invest while working full-time
• Seek dividend income
• Save for retirement

2. Study Sufficient Information

Spot trading is a profession that requires extensive knowledge. Read articles, manuals, and study various strategies regularly.

3. Learn Trading Terminology

There are many specialized terms in spot trading. Understanding these terms will help you trade more smoothly.

4. Manage Risks Properly

Set agreements with yourself on how much loss you can tolerate. This reduces potential risks.

5. Choose a Reliable Trading Platform

Find a platform that is trustworthy, has reasonable fees, and offers good after-sales service.

Various Spot Trading Methods

Stock Trading

Stock trading (Stock Trading) involves buying and selling shares of companies listed on stock exchanges. To trade stocks, you need to open an account with a brokerage (broker), which will execute your buy and sell orders on the stock exchange.

Can it generate real profits?
Investing in stocks can yield good returns, especially long-term investments. Despite market volatility, stocks tend to rise over time. Stable companies also pay dividends to shareholders.

Cryptocurrency Trading

Cryptocurrency (Cryptocurrency) is a digital asset that cannot be physically touched. It was created to serve as a medium of exchange for goods and services.

Popular methods of trading cryptocurrencies include Scalping — short-term trading that takes the least time, buying when small price movements occur and quickly selling for profit within 1-5 minutes. Traders often open multiple positions simultaneously. This method requires high concentration and continuous chart monitoring.

Forex Trading (Foreign Exchange)

Forex (Foreign Exchange) involves exchanging foreign currencies, with prices fluctuating based on supply and demand. It is the largest financial market in the world, open 24 hours a day except weekends.

Popular Forex currency pairs:

• EUR/USD (Euro - US Dollar) - Most popular
• USD/JPY (US Dollar - Japanese Yen) - Most popular
• GBP/USD (Pound - US Dollar) - Most popular
• AUD/USD (Australian Dollar - US Dollar)
• USD/CHF (US Dollar - Swiss Franc)

CFD Trading (Contract for Difference)

CFD (Contract for Difference) is a tool that reflects the price of an underlying asset. Traders do not need to own the actual asset but can profit as if they do. CFD trading requires less capital, offers high returns, but also involves high risk.

Warning: CFD trading is highly risky. Please study thoroughly and manage risks carefully.

Gold Trading

Gold is a safe asset with low volatility. Traders can trade gold via online platforms using CFD tools, which do not require physically holding gold but provide profits as if they do.

3 Main Trading Strategies

1. Day Trading: Short-term Profit

Meaning: Buying and selling within the same day, aiming for daily profits. Traders using this strategy buy and sell multiple times per day, entering and exiting quickly.

Advantages:

• ✅ Generate profit within the same day
• ✅ High trading volume
• ✅ Large price swings during the day
• ✅ No need to worry about the portfolio all day

Disadvantages:

• ❎ High volatility
• ❎ High transaction costs
• ❎ Requires high experience
• ❎ Immediate losses can occur within the day

2. Long-Term Trading: Long-term Profit

Meaning: A method that offers good returns and is the safest, taking weeks or months.

Advantages:

• ✅ Less stressful
• ✅ Greater profit opportunities
• ✅ Can work full-time and trade simultaneously
• ✅ Reduced risk

Disadvantages:

• ❎ Not suitable for impatient people
• ❎ Requires deep market understanding
• ❎ Continuous monitoring of economic news

3. Swing Trading: Mid-term Profit

Meaning: Expecting profit from mid-term trading cycles, lasting 2-7 days or weeks. Price differences are 10-100 times larger than Day Trading.

Advantages:

• ✅ Less time watching screens than Day Trading
• ✅ Suitable for full-time workers
• ✅ Lower transaction costs

Disadvantages:

• ❎ Need to monitor the market for a longer period
• ❎ High concentration required
• ❎ Continuous practice needed

Success Formula for Traders

1. Always Learn

Read articles, trading methods, and strategies on reputable websites. Find manuals and books about trading. Gradually increase your knowledge.

2. Practice Frequently

Practice is the key to success. Try trading through demo accounts offered by many platforms. Practice various strategies. Once familiar, open a real account.

3. Keep Emotions Out of Trading

Trading inevitably involves greed. Manage this emotion well. Do not let emotions drive all decisions. Consider other factors as well.

4. Consistency

No trader is right all the time. You may lose today but still have opportunities tomorrow. Use “cold” money for investments. Avoid impulsive decisions.

5. Choose a Trustworthy Platform

Finally, it is crucial to select a trading platform with a good reputation, regulated by authorities, with good customer service, and reasonable fees.

Summary: Spot Trading and Profit Opportunities

There are many ways to profit from spot trading, but traders must continually seek knowledge because trading depends on asset prices, global events, and no one knows when prices will rise or fall.

The method you choose depends on:

• Personal preference
• Risk acceptance
• Investment goals

Understand the risks and potential returns of each method before making investment decisions.

Frequently Asked Questions About Spot Trading

1. What methods can be used for spot trading?

You can trade through derivatives such as CFDs, which allow speculation on price increases or decreases using leverage (leverage), increasing risk because profits and losses depend on the full position size, not just the initial deposit. You may lose more than your initial payment.

2. What is the purpose of spot trading?

The goal is to generate returns exceeding traditional buy-and-hold investments. Conventional investors might be satisfied with 10-15% annual returns, but traders often seek 10% monthly returns. However, it is important to understand that this involves high risk.