There are many reasons to consider getting into trading. Perhaps you’re fed up of near-zero interest rates and the fact that your savings are technically losing money by sitting in an account that delivers less than the rate of inflation in growth? Or, maybe you’re au fait with money matters and want to extend your existing flair for finances, putting it to use in growing your assets? Whether it’s a push or pull factor that’s turning you to trading, there are some questions you need to answer.
Here’s the who, what, why, how and when of getting into trading…
Who can help me to understand trading?
This is the first question to ask. The good news is that there are a lot of resources .i.e. online forex trading courses at your fingertips in your quest for trading knowledge. Firstly, turn to books. So many successful traders and analysts have put pen to paper to spread their knowledge – you just need to take it all in. IG has picked out its top ten trading books – and these are all a great place to start.
Don’t stop there, however. Follow financial news online – the likes of the Financial Times and Bloomberg are great for this – to get a flavour for the latest movements in the markets and become a voracious consumer of the news in general. The markets do not operate in a vacuum. What goes on in Brexit, the Middle East, Trump’s trade war, the coronavirus and the climate crisis ALL have an impact on the markets. Understand the world around you and you’ll stand a better chance of understanding trading.
What are you going to trade?
In the course of your reading, you’ll quickly understand that you can’t do everything. If you want a volatile market that offers the opportunity for sharp swings, you might want to pick forex. If you have a particular specialism then put that knowledge to use. Or, perhaps you want an ethical investment that has an environmental focus? Whatever you pick, you need a clear focus – followed by further reading to really understand the area you wish to target.
Why are you going to trade?
This is another key question that you must address before you begin. You need a plan that sets out:
- How much money you can afford to risk.
- How much money you want to make – and what you intend to use this for (it helps to have a tangible target).
- A timeframe over which you wish to achieve this target.
Some of this may well change over time – but a failure to at least have a broad answer to the above questions could well cause you to risk too much money or lock down your cash for too long.
How are you going to trade?
Once you know all of that, it’s time to pick a platform. There’s a lot of choice these days, so take your time to pick one that you’re comfortable with. Make sure you find a provider that offers an easy-to-understand platform that works well on your device-of-choice. Ideally, you’d find some that offers technical support, advice from traders and a community of other uses you can interact with as you take your first steps as a trader.
When is a good time to start?
So, when do you take the plunge? Not until you’ve tested your tactics. Many providers offer you the chance to sign up to a demo account. It’s a great idea to do this to ensure that you’re able to put your knowledge to the test without any real money being on the line. Open up a demo account and you’ll be able to see if you need to go back to the drawing board or if you’re ready for the real world.