Beginning traders can find it hard to master or practice the skills of trading, but with these 5 tips that we are giving you today, you can for sure see yourself becoming a skilled trader as you trade with the Big Boys!
Tip 1: Learn, Learn and Learn as Beginner Traders!
Knowledge is key when it comes to learning how to trade. As beginner traders, you would want to constantly learn as you progress on with your trading journey.
Keep up with the latest market news and events that would impact your trades, such as interest rates, economic outlook, company financial reports, and so on.
Make a list of the various assets that you would like to trade and keep track of your asset picks with reliable financial sources.
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Tip 2: Side Aside a Surplus Amount of Funds That You Can Risk
Whether long-term investing or short-term trading, there would always be an existing risk of you losing money when dealing with financial assets.
As such, as a beginner trader, you should assess your risk appetite, a.k.a how much money you are willing to risk on a trade.
As a general rule of thumb, most seasoned day traders are willing to lose between 1% to 2% of their capital, sometimes even less.
Figure out how much risk you can take while trading and set aside an additional amount of capital that is adjusted to your risk appetite.
Tip 3: Keep Your Starting Amount Small
Most beginner traders make the mistake of putting in too much capital for trading, hoping that they would make it big on their first few trades when in fact they should be focusing on learning the fundamentals of trading.
As such, try to minimize your initial capital as much as possible when you start trading. Only increase your capital as you become more fluent with the market’s movement.
You can keep your starting capital small by simply trading only with a few assets. You can also minimize your capital by trading with fractional shares, which would allow you to invest in smaller fractions of the stock/asset you wish to invest in.
Tip 4: For Beginner Traders, Avoid Trading Penny Stocks
Penny stocks are stocks that are less than USD 5 per share. For beginner traders, they look like good stocks to trade with due to their low prices.
However, it is better to avoid penny stocks as they are often illiquid, and the chance of these types of stocks hitting high prices is often on the low side.
So if you have done your research on such assets and are certain that they are profitable, avoid penny stocks.
Tip 5: Stay Calm And Keep Trading
As beginner traders, you would be bound to meet with unexpected changes as you trade in the forex market.
Sometimes, these changes, oftentimes or not, can negatively affect your portfolio. It is thus important to remember that these events happen to everyone in the stock market and that you should always remain calm and keep practicing to become a better trader.
In conclusion, learning how to trade can be quite a daunting task for anyone to take upon. But if you follow the tips that we’ve provided you on this blog, you would see yourself become a better and much more efficient trader! Join our community of experienced traders here!