How do I choose what to trade?

To make a choice, it is good to answer the following questions:

What funds do I have?

Do not risk funds that are vitally necessary for you. Consider how much you are willing to set aside and risk in order to seek higher returns. Account size is fundamental in determining which instruments to trade.

How much am I willing to risk?

The most important thing in trading financial markets is discipline and good risk management. Always determine the maximum amount of losses you are willing to take if the market does not move as you expect. Set a win/loss ratio of at least 2/1.

What yield do I want?

Determine what return you are looking for on each trade based on the amount you are risking; margin you use; and the time frame you are trading.

Who am I listening to?

It is good to handle information personally and not be influenced by rumors on a forum or by non-professionals. Always consult with experts!

Practical examples of how to choose what to trade

I have 500 EUR free and I want to double it in a short period.

Registering 100% profitability in a relatively short period of time is possible through an investment characterized by a high degree of risk. When trading with a relatively small capital, the most suitable instruments are currencies, as well as contracts for difference. These instruments are available to market participants with a small cash resource, as they are traded on a margin basis. It allows you to speculate by finding a position without having 100% coverage for it. In this way, you can make a significant profit (as a percentage of your capital) if you correctly predict the price movements of your chosen asset.

I have $10,000 and I want to make money out of it in 10 years with medium risk.

When investing for a relatively long time horizon and a tendency to take moderate risk, shares are a suitable instrument. When trading securities, it is essential to choose a quality company whose securities to buy at profitable levels. You don't need to have a lot of cash to invest in stocks. You can invest gradually. For example, if you had bought $1,000 of Coca-Cola stock each year from 2009 to 2018, over a 10-year period you would have received $1,931 in annual dividends alone, and a separate $2,056 in capital gains of the share at the end of the period (40%). Another good tool are exchange-traded funds. They allow you to invest directly in an entire sector - for example, technology or pharmaceuticals, or in an index. This way you overcome the risk of a single stock and benefit from the successes of a given sector or market.