How beginners should prepare themselves before getting involved in any market trading
Trading on the financial market can be a fascinating activity and a great way of making some money. For those with the time, commitment and knowledge, it can even become a primary method of income, netting sizeable rewards. And even if you can only commit a limited amount of time to the market, you can still provide yourself with a nest egg for your retirement.
But while the opportunities are almost limitless, the risks are also very real. Starting to trade and invest in stocks without any knowledge or preparation is a sure way to lose everything. Nevertheless, there are straightforward ways of preparing yourself to take on the market that will give you a good chance of coming out a winner.
Study the market
You can start simply by following the market. Yahoo and Google both offer finance coverage – these are great places for beginners to study how the market works. As you grow more confident with the terminology, you can move on to the Financial Times or the Wall Street Journal. That way you’ll learn to spot trends, read analyses and pick up on economic concepts and jargon. There are many sources, both online and off, for useful articles.
Follow the greats
When you have the time, you should also consider reading a few of the many books on the subject of investment and stock trading. As a general rule, avoid the more sensational volumes that promise to make you a millionaire overnight. Look out for the major names in the field, such as Warren Buffett or Benjamin Graham. Many of the strategies applied sixty years ago are still valid today.
Take a course
If you’re really serious about getting involved with investing and trading on the financial market, then it’s a good idea to enrol on a professional course to learn the basics. The foreign exchange market, or forex market, is the world’s largest financial market and is open 24 hours a day, with international currencies constantly traded against each other. Forex trading courses are available that will show you how to make money on this market, whether it’s going up or down. Financial opportunities are always available if you know how to seize them. The risks are minimal if you know how to protect yourself, and trading for just an hour a day can be enough to earn you a sizeable tax-free secondary income.
Open an account
The next step is to open an account with a reputable online broker. You might want to find one that offers virtual trading as well, so that you can practise without taking any risks, until you get the hang of it. Use online forums to ask questions and pick up advice, and better still, get yourself a mentor who has experience of stock market trading. This is a tried and tested way of progressing for all successful investors.
Most importantly, establish your financial goals and how much you can afford to invest before you start. Generally, it’s best to start small and stick to one simple strategy. Treat any winnings as a bonus while you’re learning the ropes, and have fun!