Investing is one of those things that everyone knows they should do, but many never actually get started because they don’t know where to start or how to manage risk. With that said, today I’m going to share the 5 tips that I found to be most helpful in my beginning days. So, without further ado, here are the tips!
Tip #1: Check Your Emotions at the Door – One serious pitfall that beginners generally go through is emotional trading. The reality is that when you have money in the market, it’s hard not to become excited when big gains happen or conversely to get upset with you start to see losses. However, it’s important to remember that price volatility is just part of the market, and something that you’ll need to get used to. Overreacting based on emotions is never a good idea in the market.
Tip #2: Start With Assets You Know – Do you have a gold collection? Are you a big Apple or Facebook fan? The reality is that there are several companies and commodities that are part of your everyday life already. By starting out with assets you’re already familiar with, you’ll be more likely to enjoy the research needed to make profitable predictions in the market! Not to mention, the amount of research necessary will be far less with regard to an asset you already know than it would when researching a financial asset you’re just now learning about.
Tip #3: Learn About Market Analysis – Market analysis is incredibly important; no matter what type of investing you plan on doing. By learning how to analyze the market, you’ll be able to spot trends, signs of danger, and opportunities for profit. There are two main types of market analysis…
- Fundamental Analysis – Fundamental analysis is the process of analyzing data that helps to determine the overall health of a financial asset. For instance, a new CEO, product launch, or news release would all be fundamental points of data, and could cause movement in the market.
- Technical Analysis – Technical analysis is the process of analyzing technical data that helps to determine the direction of the asset’s value. Technical analysis is all about measuring quantitative factors using tools like candlestick charts.
As an investor, no matter if you are planning on short-term investments using investment vehicles such as binary options trading and forex trading, or more traditional long-term types of investment, it’s important to learn both types of analysis in order to be successful as they both have their strong points and pit falls.
Tip #4: Practice Before You Invest – No matter what type of investment you plan on doing, there are going to be several companies that offer demonstration platforms. Through these platforms, users are offered hypothetical dollars to test their strategies in the market and see if that type of investing is a good type for them to take part in. If you’re a new comer, this is a perfect opportunity to test your strategies without losing a dime; and one that I strongly suggest taking advantage of.
Tip #5: Don’t Take Excessive Risk – Risk management and loss exposure management are incredibly important. We invest to make money, not to lose it. However, going into the market with no plan for managing risk and loss exposure could be a dangerous way to lose fast. Before you start trading, take the time to research risk in the market, signs of danger, and strategies for ensuring that you’re never exposed to losses that wouldn’t be comfortable to take.
If I knew these things when I was starting out, learning how to be profitable in the market would have been a much less expensive process. The reality is that the market is a battle between bears and bulls; and a very volatile place. However, by using the tips above, you can go from beginner to profitable in no time flat! Thanks for reading and happy trading everyone!