5 Things you most likely didn’t know about Trading

There is a stereotype of what a broker and trader look like, thanks to all of the Hollywood films that show them as rich men wearing grey suits. In fact, online trading is becoming more and more popular, which means that you can sit in the comfort of your home, using online platforms to trade your chosen market.

All you now require to trade at home is access to your money, and reliable broadband; however, because it is so easily accessible, many people are venturing into the world of trading without knowing vital things that will ensure that they are successful when trading.

Here are just five things that you probably did not know about trading…

1) You Should Anticipate Failure

Something that a lot of traders do not know when they first start is that they should anticipate failures. You are unlikely to encounter wins all of the time, and you should never expect them.

Any type of trading does not come without its fair share of risks, so it is very good practice to remember this and bear in mind that you could lose your trade at any time.

There are a number of different ways that you can do your best to prevent this: by having very clear plans, and ensuring that you stick to them (more on this later), and making careful investment choices when you are trading online will definitely help you, although nothing will make you completely free of risk.

When you do experience a loss, especially when you are just starting out as a trader, do not let it stop you and put you off trading. Instead, use your experience as a learning curve, and learn from your mistakes. Doing this, rather than brushing losses under the carpet will ultimately make you a much better trader.

As a side note, because you should anticipate losses, it is absolutely imperative that you never trade with money that you cannot afford to lose. Never become tempted to trade with money that has been assigned to something else, or place more money in your account to try and recover from any losses that you might have experienced. Instead, just accept the losses, and learn from them.

2) Every Trading Experience Will Be Different

Never start trading, assuming that it will be the same experience as you had previously, or that you will experience the same outcome as another trader. Every experience you have with trading will be completely different, so it is important that you make sure you learn all the basics of trading online, before you start trading with any money.

Make use of any online tutorials, or, if you are keen to take trading seriously, take a course. This will give you an in depth knowledge for you to begin. However; regardless of the amount of knowledge that you build up, it is important to make sure that you keep realistic expectations.

For new traders who are trading online, it is important that you remain cautious and that you do not become carried away or influenced by other online traders. Take what is said in blogs and online forums with a pinch of salt. What works for one person might not work for another.

If you are new to trading, like we have already discussed; keep your expectations low, even if it seems that everyone else around you is offering great ways for you to become a millionaire overnight.

3) You Should Not Ignore Research

This point cannot be stressed enough, and it is so important that you not only carry out extensive research prior to trading, but also that you do not ignore the findings. Without research, any investments that you do make is purely a gamble – you will have no idea what the charts mean, and what is likely to happen.

Before you make any trades, you need to spend time looking at stock movements, and analysing what it means for your own investments. Start by researching the various online trading companies, before you decide who to invest in, ensuring that you have gone through all of their online tools and information very carefully, so you can be sure that you have picked the best trading company for you.

If this is your first time trading, it is worth researching the company, so you know its reputation – read customer reviews and any comments, to really get a feel as to whether this company is for you or not. Research the market trends before you start trading, as they are known to fluctuate every so often.

4) Practise Makes Perfect

The best way to learn, just like with a lot of things, is by practise. The old saying, that practise makes perfect really is true, regardless of how qualified or experienced you are. The more you trade, the better you will get at it.

You will start to really understand how the financial industry works, and how to turn your trades into profits. Like we previously said, it is so important to learn from your mistakes, as this will help you to work around the changing financial trends.

Make sure you read the latest reports, which will help you keep on top of the brokering process, so you can keep ahead of the latest trends and markets. Don’t forget to make use of any demo accounts should you wish to try something new, as this is a great way of getting to grips with everything, without spending any money.

5) Its Absolutely Vital To Plan

Not making a trading plan is about as good as going in completely blind. Investing money successfully requires a lot of careful forward planning and organisation. You will need to decide how much you want to invest, and when you would like to withdraw the money again; to do this successfully, you will need to keep a track of the stock markets, and know what you will do if they rise or fall.

Trading is not the same as gambling – it is in fact far from it – begin to think of to think of it like a business venture. You would never start a business without intensive planning first, and the same should definitely be said for trading. Your ventures should clearly be laid out so you are clear in what you are doing, before you take any bold steps of investing your money.

Once you have finished your plan, it is really important that you then stick to it, in order to achieve maximum returns from all of your investments. The minute that you start venturing from your plan, is when you will start to make uninformed and rushed decisions, which will see you lose money. Behind every smart and successful trader, is a great trading plan.

Image Credit  
http://www.tradingacademy.com/lessons/article/failing-to-grow/
http://securities.clarksons.com/Investment-Banking/Sales-and-Trading
hyperacusisresearch.org/
www.oneclearmessage.co.za/deep-deliberate-practise/
www.bplans.com/downloads/business-plan-template/

References

  • Money Nomad; 10 Things Most People Don’t Know About Online Trading
  • Daily Record; 5 things you need to know before trading shares online

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