Shares trading is not something you should go into without first giving it some real thought. This is the world where millionaires and billionaires are made but it’s also where livelihoods are ruined by big risks and poor decisions. It is a tempting way of making money to try to get into but you have to understand a few things before you start. Here are a few trading tips for beginning investors.
Think about what sort of trader you are
Trading is a very emotional business and not just because of the high you feel when a trade pays off or the despair you feel when something doesn’t go your way. Stock prices are determined by the relationship between two different groups of traders. Traders are either bulls or bears. Bulls are optimists when it comes to the market. They believe that prices are going to keep rising so they will keep buying. The trading publication The Bull is named after this group – for valuable advice, try reading some of the bull share tips. On the other hand, bears are pessimists. They believe that the good times won’t last or that the bad times will keep getting worse. Whichever one you fit into more often will affect how you trade.
Don’t expect to get rich instantly
This is something that beginners often think when they first get into trading. Trading is not a ‘get rich quick’ scheme. It takes years to master and years to build up your fortune, even when things are going well. Set out some realistic goals of what you expect to make within the next few years.
When you are first starting out, it is important to make sure that you do not spend large amounts of money. At this point, you will still be getting a grip on the way the markets work. Limit yourself to only a few stocks a day so that you can become really familiar with how the markets work through a few stocks. It is better to become an expert on a few stocks instead of dealing with several stocks and not understanding them.
Market trading is so reliant on current events and news that it would be crazy not to stay informed. The stock markets are dependent on big events. For example, billionaire philanthropist George Soros made $1 billion from betting that the UK would withdraw from the European Exchange Rate Mechanism (ERM) in 1992. He decided to short the pound based on current events, and it paid off big. Use something like a news app to send you notifications when big news stories happen. Technology has changed the way we trade, so follow publications that cover the sector that you are trading in.
Keep a journal
A record of all of your trades is an essential part of being a trader. Accurate records of your successes and your failures means that you can look back through them when making future trading decisions. Records of your trades should include how and when you reacted to the market, so you can really evaluate your performance and see how you could do better in future.