As a rookie trader, you will need to set the right expectation. This article will help you set up learning goals, and inform you of what you actually need to know to get started as a trader or investor. To be successful in trading and investment, firstly, it’s important that you know the following basic foundations:
Understand the Financial Market
First of all, understanding the financial market is essential. You need to know the industry, the security that you are going to invest into. For example, What are Stocks? What is Forex? What is Option? What are the differences? How do you make a profit? How do they work? Etc.
Understand and master the trading or investment mindset and attitude.
Developing good trading psychology and discipline is equally important. The financial market is a fierce battleground. We can’t deny that emotion plays a big part in every decision that we make. Poor emotion management may ruin your personal trading plan and cause you to make less than you should, or in many cases, more losses than you should bear. You need to learn to master the fear and greed in you and analyse the most suitable times to buy and sell using your trading strategy. This is easier said than done, and many people let their emotions control and highly influence their decision-making, against their better judgment. When it is time to buy, many people do not enter the market. Why? Because of fear. On the other hand, when it is time to sell, many people hold on because the greed in them wants to earn more. This tends to be more destructive than effective.
Master the different analysis skills
There are four major analysis for trading and investing. They are
- Fundamental Analysis
- Technical Analysis
- Timing Cycle Analysis
- Sentiment Analysis
These are different study methods we can use to analyse a security. By studying the market and open information, you can make a rational decision instead of blindly following the flows. Therefore, mastering different analysis skills boost you up from mediocre investor to rational, smart and visioned investor.
Apply risk and money management
Risk management is insurance in place. You need to learn to manage your capital. You need to decide on factors such as:
- How much capital are you willing to invest?
- What is your minimum profit-loss ratio?
- What is your risk tolerance?
- How much money should you risk for every trade?
- How do you protect your trades if the market goes against you?
Having answers to these questions is vital to effectively managing your trades and building capital.
Develop your own trading strategies.
After you have acquired all the skills, knowledge and tools from different sources to get started; and considering your own life goals, your lifestyle, your risk tolerance, your money management, you must develop a trading strategy that works for you. This is something that you need to keep on improving, to increase your winning rate. Follow our articles and courses we will teach some of the strategies.
Familiar yourself with trading platform operations (and the broker)
We need to familiar ourselves with the trading platform before investing in the real money. Wrong execution and hence money loses due to unfamiliarity with the trading platform isn’t an uncommon mistake. A winning trade becomes a losing one due to mistakes in operating the platform. These mistakes can and should be avoided. You should practice on a demo account before investing your hard earn money.
Continue learning to acquire new knowledge and information
The market is constantly changing. New technologies and knowledge evolve from time to time. We need to constantly equip ourselves with updated news, latest knowledge and technologies that can help us to do better in our trading and investment.
Therefore you should plan your learning journey to equip yourself with all the knowledge in these areas.
However, there is so much unfiltered information out there. Therefore, we have done the research and selected the important and useful information which covers above areas to share with you guys in the later chapters.
