I’ve been interested in investing in the financial markets for quite some time. Unfortunately, I didn’t have the requisite confidence to get started, since this seemed to be a male-dominated world – the proverbial boys’ club. My experience with actual trading and investing was limited to what I saw on Hollywood blockbusters like Wall Street: Money Never Sleeps. But I was determined to learn the intricacies of the trading world from industry experts. The trading arena is particularly imposing to a novice. So, I did a little legwork, seeking out reputable trading platforms offering a range of financial services to novices.
I received a Bachelor’s degree in business management, so this was not entirely out of my realm. I decided to put my education to the test by practicing a few trades on a demo trading platform. It takes a while before you become confident about your own abilities to invest real money on any type of financial asset. For all of you guys out there who are a little sceptical, let’s break it down into more manageable components. There are essentially 4 major categories that you can invest in, including: indices, commodities, stocks, and forex. A relatively new addition to the trading arena is cryptocurrency such as Bitcoin, Litecoin, Ethereum, and Dogecoin to name but a few.
Here are 4 tips from a trusted financial expert from Wilkins Finance:
1. Pick an asset that you understand – believe it or not, everybody understands multiple financial assets. The one you work with on an almost daily basis is money – the USD, GBP, EUR, JPY, CHF, or ZAR. The currency of your country is something that you will have an intimate understanding of, particularly when you consider things like interest rates, inflation rates, GDP, demand and supply considerations. I recommend choosing your currency as a starting point. You can always expand your financial portfolio to include multiple other assets or categories as you become more familiar with trading and investing.
2. Allocate a budget to your trading activity – the golden rule is never to trade with money that you don’t have, or cannot afford to lose should trades go the other way. Be advised that experts do not recommend placing more than 1% or 2% of your available bankroll on any individual trade. This is called spreading your risk across multiple trades, and/or assets and categories. Just as you would not place all your eggs in one basket, you certainly don’t want to place all your bankroll in a single investment. A budget allows you to divide your bankroll into manageable portions which can be allotted to individual trades. A $10,000 trading budget for example can provide for 100 trades valued at $100 each. That way you can always spread your risk and minimize your exposure to bad trades.
3. If possible use a demo trading account – this is a great idea for novices, intermediate-level traders and even experts. Since nobody knows quite how any one trade will go, it’s a good idea to practice your trading tactics and strategies on a practice-trading platform before you trade for real money. Demo accounts are available at many of the leading online trading platforms, and you are typically assigned a faux trading account which mimics real life trading activity.
4. Read financial news articles, blogs and updates – nothing can substitute for the value of a high-quality financial education. This develops financial literacy which assists you in your overall trading activity. The more you read, the better you will understand the market factors that impact trading activity. It is a good idea to stay abreast of the latest developments with an eye to economic indicators, and their importance on your chosen asset. For example, if the Fed, the BOE, the BOJ, the ECB or any other central banking authority is thinking of raising interest rates, this will typically cause an appreciation of the currency in question. You may wish to go long on a specific currency, or index when interest rates are slated to increase.
Remember, knowledge is power. Empower yourself with sage advice from leading industry experts. I got a great start in the financial markets thanks to a sound education. You will benefit immeasurably from trading on a demo platform with a reputable trading brokerage.