Investing as a way to earn money has been here for years, but in these past several years it took off and anyone can become a successful trader if they are willing to learn and broaden their knowledge.
Investing is a neat thing to do on the side or as a full-time job. Whether you do it professionally or to help your current financial status a bit some things are imperative to know before you start your investment career. You can find more information on this site and see years of research with tried and tested real-life applications we can for certain say that these 5 things you need to know before you start investing.
Everyone needs help at the beginning, so why shouldn’t we share what we know with you. What you do with that knowledge after it is all up to you. We advise – build upon it and continue to reap havoc on the market with trade after trade that will bring you financial safety above everything else.
So without too much further due today’s article will tell you about 5 important things you need to know before you hit the markets and start trading!
1. Plan and be thorough
Whether you are trading big or small there are few things you need to know or calculate right off the bat. What is your goal, what are the risks, what is the performance of your stock, what do charts say before today and today, what was happening past month, past six months and so on? You have to think about all of these things and consider everything. Information is the key here and you have to know everything from what is the market doing, what is the sector doing and how is that impacting your trade?! Everything is important no matter how big or small. Somehow all those things we think might not affect our trade eventually end up affecting it and since we didn’t predict them we miss out most of the times. When planning it is important to have all these questions answered and to have everything laid out so you can read and recognize the movements. Being thorough means that you must not miss a single piece of info and you have to consider everything no matter how meaningless it might be. This is what pro traders are doing, and believe us, every trade they do is carefully considered from beginning to end.
2. It’s not all about the money
Most traders make a rookie mistake and focus just on the money side of trading. What this means that you only see the money you can win, but the pro tip is to consider the money you can lose. What you do to make your successful trade is to weigh your trade in a way that you stack the potential win against a potential loss. Where the potential to win is big and sometimes seems surreal it probably is and you will lose and fall into that 90% of all traders lose category. If the potential to win isn’t that significant but the potential loss isn’t that big take that trade any time of the day. Don’t get us wrong this isn’t the only thing to base your trades on, you still have to fulfil everything from the first point. Just program your mind not to see only the winnings, but to be aware that you can lose plenty on any trade. This will make you a lot more conservative and cautious when entering any trade. It will also force you to understand the asset and dig a bit more into it which will fortify your chance to make a successful trade.
3. Quick loss cut
Somehow most new traders fall on this test. Yes, it is in our nature to try and make money, to be patient and to wait out the bad weather, but if for any reason your trade isn’t doing that good, cut your loss as quickly as possible. Yes, there could be a change, they could have good or bad news, they can lose or raise money, the market could be against it or anything in between but what is good practice to do is cut this trade as early as possible because you don’t want to think about these things and hope for the best. This will eat you up and nine out of ten times will keep you so deep in stock, probably a volatile one, that will end up costing you more than it should. Be mechanical and be disciplined when it comes to this because you don’t want to make a small mistake that will end up as one huge disaster.
4. Everything adds up
Most of us going into trading for the first time dream to be filthy rich. WE want to be the next Warren Buffet. This is the mindset of 95% of people going into trading and it is normal. Everyone wants to make lots of money and trading can fulfil that dream there is just one thing to have in mind – keep it slow and cautious. What most of us newbies don’t know is that a path toward becoming a millionaire is pawed in singles. This means that small gains in trading add up and they all lead to huge money; you just have to be patient enough. Looking for that one company or stock that will bring you into the millionaire world is like finding a needle in a haystack. Go small and stack your winnings up your first million will come, just don’t rush things.
5. Focus on assets that are already in play
Being first in something isn’t always a good thing. It does pay off sometimes to discover a gem that might lead you a long way but the risks tied to that are too big that they outweigh the positives. Look for assets or stocks that are in play for a while because when going in on something first you might spend a lot of time waiting for a market to catch up on that stock or asset. This means that you will miss out on all other opportunities that are right in front of you merely because you invested in that one thing you believe in but you are not certain when it might pay off. Always keep in mind that many companies come and go quickly and even if you do your research from top to bottom and you are 110% certain that they are the one, something might happen along the way and you could lose everything, while others grabbed back and forth for something that was in play for a while.