Starting trading is the easiest thing to do. All you have to do is open a trading account with an online broker and you’re done. You can do it from your bedroom, living room or office in a few minutes
However, knowing how to trade in order to make your starting capital grow is another. Any trader who respects himself and aims to create long-term capital gains must have a trading plan. It is essential to have a basic knowledge of trading before really starting out, such as: When to enter the position? When to get out? How much to invest? What to invest in? etc.
If you have any such questions, this article is for you. Together, we will see in this article the most important steps to follow in order to ensure your success in trading.
Phase 1: Evaluate your investor profile
The first step in developing your trading plan will be to assess your personality in order to know what type of investor you are.
If you can afford to spend your days on your computer and you can handle the pressure of the markets then DayTrading is for you. Otherwise, if you have an activity outside of trading, opt for an approach that aims to invest over the medium and long term.
Also analyse your financial means, i.e. how much can you invest to get started. Never invest money that you may need right away. Trading, when not controlled, can cost you all your money in minutes or even seconds.
In conclusion, ask yourself whether or not you are able to lose the amount you are gambling on behalf of your trading plan (Note that it is quite possible to train on trading platforms offered by online brokers before deploying any capital in the financial markets. In general, these trading platforms allow you to invest in the markets by offering you a fictitious sum of 100 000€).
Phase 2: Learn as much as you can
Many people will talk to you about trading. There are countless websites and forums dedicated to the subject. Some people talk about this action, others about that currency…
In any case, make sure you learn the basics of trading by reading books on these topics or reading on the Internet. Have your own review on a particular financial instrument and don’t let yourself be fooled by scammers on the Internet.
Trading is an activity that is constantly evolving, some cycles are repeated. So learn to identify them and stay informed of changes in this activity. If your goal is to really move up a gear by making trading your profession, then hang in there because contrary to popular belief, trading requires a high level of investment knowledge if you want to make a profit in the long term.
Phase 3: How will you invest?
Also know in which market you will invest, if you work all day, maybe the French and English stock exchange is not for you because of the opening and closing hours if you DayTrade. In this case, choose foreign scholarships such as those in the United States. If your investments are made in the medium and long term then you will not have to worry about that.
Also stay informed about the world economy and follow the media regularly. Even if at the time of the news release they have already been passed on to the markets, this could give you future trading ideas.
Use fundamental and technical analysis as powerful tools to confirm or not your decision-making. Never neglect them. Familiarize yourself with company reports (Income Statements, Balance Sheets, Cash Flow Statements…) and learn to identify certain trends such as Head and Shoulders, Double Top/Bottom, Flag Pennant etc..
Be realistic in your objectives. Trading will not allow you to become rich overnight. Trading opportunities are good and present. But before you recognize them, you will need to gain experience and above all become an expert in the field.