How to gear up for trading is a question that torments traders’ minds, especially beginners. Being a trader and navigating the volatile global markets is no easy task. Building a solid trading strategy with risk management mechanisms may help you overcome adverse market conditions.
But how can you get yourself geared up in the meantime? Alexander Graham Bell said that “before anything else, preparation is the key to success.” If the telephone’s inventor, a person that changed communications forever, believed in that, maybe we should also. Achieving your trading goals requires a plan and won’t happen right away.
Here are some simple things that you could do to gear up for trading.
Get to know the financial markets
The term “financial markets” is used to refer to any marketplace where securities are bought and sold. This includes, but is not limited to, the stock market, the bond market, the forex market, and the derivatives market, amongst others.
If all these terms don’t sound familiar to you, it would be best to refrain from trading. Trading may result in loss of funds if you don’t know the fundamental things related to types of assets, risk management, the various ways that markets function etc. When it comes to trading, knowledge is power.
You may be wondering how you can learn more about financial markets. The internet is a vast resource of information, but you should be careful and filter every blog or article you read as only top financial websites are likely to review and validate their content. Reliable regulated brokers also provide their clients with a wide range of educational materials, such as blogs, webinars, seminars etc. where market analysts share valuable market insights.
Choose a regulated broker
A Google search for “trading brokers” will return hundreds or maybe thousands of results. However, regulated and trustworthy brokers are not so many. Some unregulated brokers may promise great profitability, bonuses and other incentives but no regulatory authority oversees them.
Opening an account with a fully regulated broker mitigates the risk of you falling victim to fraud, as there is a regulatory authority to review activities and proceed with the necessary actions if anything is wrong. Most regulated brokers have negative balance protection policies which provide the framework under which negative balance is compensated.
Another perk is that regulated brokers are obliged to keep their clients’ funds in segregated bank accounts. This means that a broker cannot use its clients’ funds for any activity other than meeting their trading requirements.
Established and regulated brokers give you access to hundreds or thousands of instruments, various types of assets and a wide array of cutting-edge trading tools that can boost your trading strategy.
Practice with a demo trading account
Most brokers provide their clients with the option of using a demo account. A demo trading account enables traders to use virtual funds, execute various trading strategies and allows them to practice in realistic market conditions without any risk of losing real funds.
A demo account is ideal for beginner traders as it allows them to test their trading ideas without risk and anxiety. You can become familiar with trading platforms such as the MetaTrader4 and MetaTrader 5 or any other customised platform offered by your broker. You can also test how to use the risk management tools in real-time and simulate the trading strategy of your choice.
Set your goals
Setting your goals is imperative for any plan. Trading is no exception. Before you embark on this experience, you should decide on what you want to achieve and what means you will use. As trading may result in loss of funds, it would be wise to set the bar low.
If your trading strategy’s results are positive, you can reevaluate your goals and adjust your strategy. However, it should be noted that any adjustment should include utilising the risk management tools at your disposal.
Does trading on macroeconomic news interest you? Learn how this approach works with our free webinars. Meet and interact with expert traders. Watch and learn from live trading sessions.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.