Trading is a profitable hobby for people from all walks of life. Some casual investors eventually develop the skills to make investing their full-time occupation. Whatever your financial goal may be, the key to making money in the market is to first establish a sound foundation.
The Investous team has compiled the 5 most important cfds trading tips for beginners based on our combined decades of experience.
Choose the Right Broker
The financial market is highly regulated because of its potential for both profitable trade and dishonesty. One of the most important steps to take as a new investor is to select the right broker.
Many people simply go by the recommendations of their friends and family. This can be a reasonable starting point but you should do some research of your own before handing your money over. The simplest solution is to go with a renowned trading company where there are no questions about the brokers’ licenses and authority to trade on your behalf.
Don’t forget to pay attention to the details like brokerage costs, which may be a flat fee or a percentage of the trade value.
Understand the Terminology
Do you know what Normal, Stoploss (SL), Margin Intraday Square up (MIS), Bracket Order (BO), Limit Order, and Cover Order (CO) mean? Whether you are trading on the stock exchange, US Forex market, or any derivative, market information is full of acronyms, short forms of words, and unique terms.
For the uninitiated, it can feel like reading or listening to a foreign language. Familiarize yourself with these terms to the point that you can read or listen to trading information without being confused about what was said. This simple step will help you navigate the confusion, understand the market sentiment, and make the right investment decisions.
To be good at something, you have to first understand the fundamentals involved as well as their effects. Learning the lingo and terminology is a good start; after you accomplish that, set your sights on analyzing every bit of information that affects the value or rate of your investments.
This deeper understanding will allow you to spot market trends before they substantially affect the market. It also gives you markers that indicate when it is not a good idea to jump on the bandwagon. With this insight borne of your analysis, you transform from a reactive trader to one who can predict market movements. It will help you maximize profits and minimize losses whether you trade currency, derivatives, or commodities.
Create a Strategy
A good plan is an investor’s best friend. It allows you to approach your investments and market news with an orderly set of responses. Most importantly, it prevents you from developing an emotional attachment to stocks that inhibits your ability to make the right decisions.
Your strategy can be based on price movements over a day, weekly, or any other period. At its heart is an understanding of the fundamentals that affect market data, as well as the indicators of change. Adapt your strategy to your own evolution as an investor as you learn more.
Investous allows you to begin with a practice account to hone your strategy before you commit financially.