How Does Trading Work?
In general, the trading process can be divided into several main stages, namely:
Market Analysis
Before executing a transaction, a trader needs to analyze the price movements of the assets to be traded. This analysis can be done through two approaches, namely technical analysis and fundamental analysis. Technical analysis focuses on historical price movement patterns of an asset, while fundamental analysis studies the factors that influence the supply and demand of the asset, such as economic, political, and industry conditions.
Determining Trading Strategy
Based on the analysis results, the trader will determine an appropriate trading strategy, such as opening a long (buy) or short (sell) position, when to enter and exit the market, and how to manage risk.
Transaction Execution
After determining the strategy, the trader can execute buy or sell transactions through the available trading platforms, such as broker applications or websites.
Risk Management
One important aspect of trading is risk management. Traders need to determine the amount of capital to be used, set stop losses to limit potential losses, and implement diversification strategies to reduce risk.
Monitoring and Evaluation
While the trading position is open, traders must continuously monitor price movements and market developments. If necessary, traders can adjust their strategies or close positions to secure profits or minimize losses.