Successful trading is an art form. Successful traders focus on the art of trading. They invest wisely, because they understand the laws of trading. They know when to invest, where to invest and how to protect their investments. One of the most common mistakes made in trading is jumping right in to Inertia Trader the market, without understanding where it's going, and without knowing the signs that the market provides. It's kind of like jumping into the water without knowing how to swim: the odds are against you.
Trading these days is done mainly in the short term, in what is known as day trading or aggressive trading, meaning that trades are bought and sold within a short time frame. Day trading is donewith highly liquid assets, meaning that the value of the traded asset can change a great deal in a short time. This enables large, quick profits, and is therefore more attractive to most traders.
Long term trading is called passive trading, and involves trading in time frames of months or years, in the hopes that the value of the invested asset will increase over time. Global trading is done by buying and selling various products. All of these products can be defined under the umbrella terms of assets, or financial instruments. Let's list the most popular financial instruments. Currency pairs are currently the most traded assets in the world. They refer to the ratio between the currencies of two different countries.
The first currency in the pair - the one on the left - is the base currency, while the one on the right is called the counter currency. In trades involving currency pairs, the trader buys or sells the base currency at the current market price, and then takes a profit or a loss according to the movement of the base currency relative to the counter currency. In today's market, not only currency pairs but also commodities and raw materials are traded, including metals such as gold, silver and iron, and agricultural products such as corn, coffee, rice and wheat.