Trading in the markets has its allure: flashy suits, expensive cars, and wads of cash. Some people think it’s a science, while others think it’s akin to gambling. Whatever your view is, the fact remains: big wins – and losses – can be made.
Unfortunately, trading doesn’t come naturally to most, and a lot of education is needed before the first stocks are even bought. Here are three tips to help you trade successfully on the markets.
Watch your emotions
According to TheBull.com.au, many traders follow the “Two Per cent Rule”, which requires them to have no more than two per cent of their capital in any one trade. This minimises big gains (and losses), which reduces the tendency to be greedy, or even fearful.
Regular small gains are much less risky than large gains followed by large losses, and they will also minimise any emotionally driven buying or selling. Moreover, small gains can also quickly build into larger amounts, provided you play your cards right.
Pick the right broker
Most people need some help navigating the complexity of the stock market. When choosing a broker, you need to take a number of factors into consideration. According to Moneyweek.com, you should think about how you’d want to contact your broker (online versus phone), as this could impact on cost.
You’ll also need to decide whether you want to deal in foreign or local markets or both, and you’ll need to be aware of possible hidden costs, such as interest on unused cash in your trading account, or penalties for infrequent trading.
Have a plan – and stick to it
Share trading shouldn’t be approached in a fickle fashion. You need to know exactly what you’re doing; otherwise you could make big losses. According to Rediff.com, a successful share trader understands the market’s main trend: they’ll know at which level they’ll enter, and what targets they’re looking at. They also won’t be too concerned about what the news says – they’ll just focus on what the markets are doing.
Share trading isn’t for the faint-hearted, and it’s not a skill you can pick up overnight. However, if you’re interested in dabbling with the markets, there are a few online finance courses you can take which deal specifically with trading.
Successful trading not only requires keeping up with how the markets are performing, but it also means that you need to educate yourself about how they work, what trading techniques you can use, and even what trading psychology you should employ. Take a finance course, and start making some gains in share trading.
- License: Creative Commons image source
Written by Ang Lloyd, who has often thought of dabbling in the stock market but who wants to get a few more online finance courses, such as those promoted by Now Learning, under her belt before she dives in.