The World Wide Web has changed the way we live our lives, an information highway that offers a lot in terms of commerce and trading shares is one aspect of digital commerce. What used to take place in a trading pit, where traders used hand signals to open and close potions, is now on a secure digital platform where real-time trading occurs.
If you are moving into the world of share trading, here are a few mistakes to avoid.
- Trading before you are ready – While trading is often regarded as a game, you are playing with real money when you open a live account; new traders would use demo accounts and trade on a share trading platform with access from an established trading broker. You should trade with a demo account for at least 3 months and only move on to real trading if you are ahead of the game. Of course, you are keen to actually start trading with real money, yet the more hands-on experience you have, the better the outcome.
- Trading without a plan – If you decide on a whim to take up trading, open an account and start trading, your chances of success are virtually zero. First you need to understand trading strategies, then identify goals and put together a trading plan, which is your guideline. A plan is never set in stone; there may be occasions when you need to make some adjustments but generally speaking, your plan should lead to a favourable outcome.
- Become emotionally attached – This is a surefire way to losses; getting emotional when trading leads to loss might lead to a desire to chase your losses by opening new positions. Emotion has no place in the trading arena; ask any seasoned trader and they will tell you every trader has to find their own way of keeping emotions at bay. Making data-driven decisions is the core of real-time trading in a global marketplace and by using cutting-edge software, you can get an edge.
- Lack of risk management – Failing to understand the risks involved can lead to losses; when you register with an award-winning trading broker, you get access to a huge digital library of learning resources and you can fully understand how to manage risk when trading. It is key that you understand the risk-reward ratio, while also learning how to use stop-loss orders to prevent large-scale losses.
- Being overly optimistic – Some people are optimists by nature and it is easy to push aside risk, thinking that losses happen to others, not you. One should approach trading in a realistic way and it is a good idea to play devil’s advocate when considering trade options, to help you reveal risk, which is part and parcel of trading.
The most important thing to do is partner up with a leading trading broker with secure access to global markets where you can trade in real time. Work hard, apply yourself and you should enjoy a level of success.
