So you want to get into trading as a way to earn some extra cash but you hardly know anything about it? Let us give you 5 tips that will prevent you to make unnecessary mistakes and will ensure that your trading endeavors go smoothly, safely and successfully.
1/ Learn About Finances
Everyone who wants to involve himself into trading or into any form of investment needs to be knowledgeable about finances. Developing your financial skills is essential to understand and master the art of money, how to accumulate assets and limit liabilies in order to grow your wealth. It also allows you to know how to minimize the risks associated with your investments and protect your overall financial situation. You also need to know how much funds you can dedicate to trading for instance and how much of this capital can you put into each trade. Check out our lesson on this matter here.
2/ Get Familiar With Trading Tools & Indicators
Trading tools and indicators are crucial to be able to understand previous moves, current trends and forecast future price action. This is called technical analysis and is used by every trader in every market. There are a wide range of indicators and we believe that you should at least grasp the main ones before you start trading with a live account as 80% of your trading should be based on technical analysis. For more information, we strongly advise you to read our full lesson here.
3/ Practice On A Demo Account
Unlike most people think, trading success is not the result of luck but of knowledge and skills that have been developed over time. We strongly advice anyone interested in trading to practice on a demo account first before getting out there and risking your own money. Because even though there are no guarantees in the financial markets, understanding what you’re doing and have data of your performances will greatly help you to minimize your risks which should be every trader’s main priority.
4/ Don’t Listen To The Hype
As we mentioned earlier, your trading decisions should be mainly based on technical analysis. Next to that, you should also know about the latest development in industries that have an influence on the assets you’re trading. This is called fundamental analysis. However, you should definitely not listen to what others have to say about the next price move. One of the biggest mistake that beginners make is changing their strategies too often because they’ve heard of a certain ‘trading signal’ from a so called trading guru on social media. Don’t listen to the hype and stick to the budget and to the plan you made.
5/ Invest In Yourself
Trading requires a lot of self discipline whether it is about sticking to the strategy you made or manage your emotions in each session. Professional traders know that to perform at their best, they need to be in top shape each time they enter the market and so should you. Take some time to develop some aspect of your psychology and your mindset. This will not only help you get better trading results but will also improve your life in general. And remember, you are your most valuable asset so invest in yourself!