The world’s financial markets are the true heartbeat of the global economy. From stock exchanges to the FX market, the crypto sector and beyond, these markets are key to society. They also present great opportunities for people to trade on and make money with. This could be as a side-line to your full-time job or as a new career altogether. With high liquidity, low barriers to entry and the chance to make very decent returns, trading is certainly something to think about when it comes to generating extra income.
Before you jump right in though, it is important to work out which approach you will use. This is vital as it will help you not only enjoy trading but handle it in a methodical way and get the most from it. In broad terms, there are two strategies to adopt – passive and active trading. But which one should you choose?
What is passive trading?
This is basically what it says on the tin – you take a much more hands-off approach and do not get overly involved with chart analysis or spotting new opportunities. How is this possible? It all comes down to technology and using the best robotic trading software you can find.
The Libra Method app shows how this works and is an automated platform which makes passive trading in cryptocurrency simple – not to mention profitable! Once you have downloaded and set your trading robot going, it does all the hard work around trading for you. All you have to do is check back in now and then to see how your portfolio is looking or count your cash.
This type of trading is ideal if you do not have time to spend analysing charts or executing trades yourself. It is also ideal if you struggle to handle your emotions when trading or feel you do not have the expertise to manually trade successfully. The key benefits of using an automated robot to trade passively include 24/7 market presence, ultra-quick trade execution, high accuracy levels and how simple they are to operate.
What is active trading?
Active trading on the other hand sees you take a much more active role in the whole process. Rather than sitting back and letting an automated trading robot do it all, you would spend time examining charts and looking at what the market is doing. When you think you have found a good trade on your market of choice, executing it in time and managing the trade is your responsibility. Trading in this way is much more time-consuming and will require you to have far more knowledge about how the market you are trading on works.
It will also require you to be constantly up to date with the latest financial news and be ready to react quickly to market moves. Who may enjoy this way of trading? Essentially, it will be people who find a passive approach too boring and want the buzz of being involved in the markets more directly. It will also suit a calmer person who can keep their emotions in check when trading actively.
Many active traders also like to trade on shorter timescales as this means they have the adrenaline hit of being in the markets regularly. The major benefits with active trading are the excitement it offers and the personal satisfaction you can feel when a trade comes off. It may also suit you if you like to be in full control and do not want a piece of software placing trades automatically with your money.
Could you mix the two?
What happens if you would like to be more involved in trading but still would like automated software to handle most of the hard work? The good news is that you can take this mix and match approach with many of the robotic trading systems available. Many systems have the ability to switch the software from fully automated to give you a bit more control. This allows the trading robot to do its thing to find potentially lucrative opportunities but only notify you of them. It would then be up to you to decide if you want to go ahead and open the trades. In this way, technology helps you to get the best of both worlds.
Passive, active or combined – the choice is yours
The simple truth when it comes to trading is there isn’t one approach that is best for everyone. All traders have different personalities which means you have to choose the one you like best. This could be different than what we would choose or your best friend would. It does seem, however, that a passive approach is becoming more popular as people look for ways to invest which do not take up large amounts of time or involve lots of extra work.