Interested in starting trading in the finance markets? If so, here are some hints and tips.
Getting into trading is open to most people these days. The financial markets are more accessible than ever before, thanks to user-friendly digital platforms and the huge wealth of information available to amateurs.
Whether you’re interested in it as a side hustle or just another hobby, here are the first steps you should take if you’re a complete beginner.
Do your research and understand the basics
Before getting anywhere near the live markets, it’s crucial to educate yourself about the fundamentals.
Trading involves buying and selling financial assets to make a profit. These assets can include stocks, foreign currencies (forex), commodities, such as oil, water and gold, or cryptocurrencies.
Get to grips with some of the jargon you’re likely to encounter, including words like ‘spread’, ‘leverage’ and ‘margin’. There are plenty of sources online or you can buy a trading book for beginners.
Choose a reputable trading platform
Once you know a little more about what you’re doing, it’s time to find a broker that can facilitate your trades. Most online platforms give you user-friendly access to their services.
Find one that’s authorised and regulated by the Financial Conduct Authority (FCA) to ensure your funds are protected. It’s also worth considering the sorts of markets you want to operate in. Some only work with certain assets, while others offer a wider range.
For example, Tradu is a multi-asset trading platform providing access to everything from stocks and forex to commodities and indices. Most sign-up processes are easy to navigate and take little time to complete.
Start with a demo account
Before risking your own funds, all beginners are advised to try a demo account. These let you practise executing trades without using real money.
You’ll get a better feel for market movements and be able to test strategies while building your confidence. Spend some time on the demo account until you feel ready to start live trading.
Create a trading plan
Being successful in the financial markets requires a solid trading plan – you might get some luck, but you can’t bet on it. Outline your goals, where and when you want to trade, and how much risk you’re willing to take on.
It’s best to start small while you’re new to the game. Use these trades as learning experiences and try to not get too disheartened. Once your portfolio grows, you’ll need to pay close attention to risk management.
Tools like stop-loss orders can automatically close a trade if it reaches a certain loss threshold. Diversification is also a good strategy to manage risk by avoiding putting all your eggs in one basket.
As you ease yourself into trading and the financial markets, you’ll slowly learn what to do and what not to do. Don’t forget, your capital is at risk, so don’t invest anything you can’t afford to lose. Good luck!