Trading, once the preserve of stockbrokers and banks, is an increasingly lucrative opportunity for everyday people to increase their net worth.
There is a simple reason for this.
The increasing reliance on the internet and smartphones has made it possible to trade on the move, with just a few clicks of a button. A whole world of asset classes is now available to the average consumer, making it possible to build a portfolio that only twenty years ago would have only been possible for wealthy investors or banking firms.
However, despite this incredible opportunity, trading remains a daunting venture to embark on. You need a good deal of specialized knowledge to be a successful trader, study the markets repeatedly, and forge an effective trading strategy.
It is at this point that many people turn their backs on trading. Learning the basics of trading appears complicated at first, and it can be difficult to know where to start.
This is understandable, but it shouldn’t put you off. Once you understand the fundamentals of what to study, where to focus your energies and what to ignore, you will find yourself in a far more confident state of mind.
Here is a beginner’s guide to trading:
Do Your Research
The most important aspect of trading is research. Without having a clear understanding of the market, you are trading in, the asset class and the specific stock or commodity you are dealing with, you are likely to make a mistake.
This is where many trading horror stories happen. An overzealous amateur trader takes a punt on a particular stock. Perhaps they read about it briefly in a newspaper or a friend recommended it. When they do trade it, the details are completely amiss, and they lose a considerable sum of money.
It is these types of scenarios that you will want to avoid when learning to trade. Do your due diligence, and you will be rewarded with a successful trade more often.
As part of your research, be sure to check prices in the asset class you want to trade in – such as on a Terra price chart.
Set a Clear Trading Goal
Having a clear goal is vital before you start trading. This is because there is a chance that you will take too many risks on a trade, overstretch your budget, or spend too long concentrating on trading if you don’t have a clear target in place.
Once you know what financial figure you’re working towards – whether it is a lump sum or a certain amount of monthly income – you can adjust your trading strategy to suit.
Don’t Spend More Than You Can Afford
The most crucial lesson you should learn about trading is that you should never put more money into the transaction than you can afford to lose. Problems only ever occur in trading when you go all in on a certain trade when you don’t have the available cash to cover potential losses.
Instead, set yourself a certain budget per week or month, and endeavor to stay as close to it as possible, to avoid financial issues from occurring.