There are hordes of aspiring investors who simply jump into trading without learning the ropes. Trading takes certain skills that can be learned if one takes the time to learn and is patient. To be a successful trader, patience must be cultivated.
An aspiring trader should look into the relationship between money and self-worth before jumping onto the trading wagon. Once you have that lined up, improve your chances of trading successfully by learning to trade with skill and authority.
Four Easy Steps to Start You Off
1. Open a Trading Account
A credible trading platform such as MetaTrader 4 is the best place to begin. They will start you off with a free demo account that allows you to learn before you begin trading actively. Learn the interface as well as the free trading tools provided.
Also, the trading platforms offer a wide range of products to trade from. MetaTrader 4 supports cross-device as well as cross-platform trading. It is also equipped with a range of valuable research and analysis tools that are vital to traders.
2. Read and Research Widely
There is a plethora of information available out there. For instance, you can access eBooks online as well as website tutorials. There are also hundreds of stock market books and a wealth of financial articles both online and in the dailies.
Study ideas and concepts that may not be applicable at the present time. They may be relevant in years to come. A good grasp of the world of trading will hold you in good stead as you trade. Knowledge, as they say, is power.
Also, follow the market every day and read about the overnight price action on foreign markets. The latter is best done early in the morning. Follow informative sites such as CBS MoneyWatch as well as Google Finance and Yahoo finance.
3. Learn Analysis
You may not be aiming to be the expert on price action analysis…at least not yet. However, some knowledge of technical analysis is very helpful. You may have heard that fundamental analysis is the better bet because it covers growth and curves.
However, price action is the gospel seasoned traders swear by as it deviates distinctly from underlying fundamentals. Also, examine tons of price charts in all time frames as well as company spreadsheets.
You are building up your ability to predict the price. In theory, securities are expected to go high or go low. This encourages long-side trades or short sales. Realistically, prices are dynamic and can seesaw into any direction leaving buyers and sellers surprised.
Traders must be keen on time horizons when this happens because of trends and ranges of trading. Independent movements generate movements at the following intervals:
- Short-term intervals
- Intermediate-term intervals
- Long-term intervals
These have been known to happen all at the same time. The majority of the trading opportunities appear via the interactions between these intervals.
4. Practice Makes Perfect
You have done the groundwork. It is time to put what you have learned into practice. Virtual trading offers the rookie trader a great opportunity to follow real-time market actions. You can make a load of trades with a variety of strategies.
Use various holding periods and then examine your results for noticeable faults. Once you get the hang of it, you can start trading using real money. Remember that the flaws that were revealed during paper trading may show up when you start real trading.
It is important to remember that you can make profits as well as losses. Therefore, you must always be careful to trade only what you can comfortably lose. As you gain experience, you will start putting up more and enjoying the results of your patience.
Begin by learning the financial markets, read the charts, and observe price actions. Build your strategies with the observations in mind and test them in your demo account before you start trading for real.
Interesting related article: “What is a Trader?”