Making the decision to start trading stocks is exciting and difficult. On the one hand, you’re about to embark on a potentially lucrative and thrilling career, and you could well be leaving a job you’ve hated for years to do it. On the other hand, this could undeniably be a tough and rather scary process. You could be leaving familiarity behind for something uncertain and risky. When you know how to do it, trading can work well for you, but if you go in unprepared you could struggle.
You shouldn’t consider pursuing a career in trading without knowing what you’re doing first. There are things you need to make sure you’ve got under your belt before you even consider trading on the stock market. Competition is fierce and many traders are excellent at what they do. You won’t find it an easy job to break into if you don’t have the necessary background. Don’t worry, though – we’re here to help. Here are 5 things you need before you start trading on the stock market.
The most important thing you can have when you start trading is capital. Money is king in the trading world, and the less of it you have, the more difficult you’re going to find the market. Before you get started, make sure you’ve amassed sufficient capital for investment. There’s nothing worse than bidding on stocks only to find you don’t have what you need to make an investment. There are lots of ways you could build up the cash you need. If you only need short-term cash and you’re not struggling long-term, you could consider taking out a loan. Find yourself a solid, dependable and friendly loan provider – we’d recommend loans2go for this – and you’ll have the money you need to begin your new career.
Do you know what an all-or-none trade is? Are you familiar with the ins and outs of Forex trading? Are you a noise trader, a market timer, or an arbitrage trader? If none of these terms mean anything to you, you’ll need to amass some knowledge before you take on the stock market. There are several excellent resources available online to help you figure out what kind of trader you want to be. Sites like global-view.com helpfully break down the differences and teach you how to be an effective and galvanising stock trader. There are also a whole host of helpful automated tools and ways to trade without necessarily needing to be present at your PC while you do it. Knowledge is power in the trading world.
If you’ve already got a day job, you might struggle to balance the time commitments of being a trader and working that job. Trading can be a full-time occupation; you’re constantly watching markets for fluctuations, making investments based on snap decisions and current events, and changing currency in an instant. As such, you’ll need to be available at all times to capitalise on opportunities and avoid pitfalls. If you think you’re going to have the time to trade, and you’re willing to put in the effort, you can balance trading as a second job. You should, however, consider making trading your main source of income, especially if you’re good at it. You’ll find you have much more time and can devote much more of your attention to trading if you don’t have any other distractions.
You are going to make bad investments. That’s something you need to accept and move past immediately if you’re going to be a trader. Although there are definitely ways to predict and move with the market, sooner or later you’re going to make a mistake. We are all human, and we all make mistakes. When these mistakes happen, the worst thing you can do is simply give up and think everything is lost. Even the best traders mess up now and then. Trading is about learning to move past those mistakes and capitalise on them, creating opportunities where you previously only saw disaster. Of course, if you’re consistently losing and never making good investments, then you might want to reconsider whether this is a good choice for you. One or two slip-ups, however, shouldn’t derail your dreams of being a trader.
Don’t simply enter the stock market without practising first. There are plenty of excellent websites and brokers who will help you with a demo trading account before you get started trading for real. These accounts give you an idea of the ins and outs of the stock market, allowing you to trade for fake currency. Everything else about a demo account feels real; the visual setup, the process of actually trading stocks, and the basic rules are all the same. The only difference is you’re not trading with real currency. When you do make your first beginner mistake, you’ll be glad you chose a demo account instead of immediately opting to trade real currency. There’s no risk, and you’ll gain valuable experience that you can then use in the real market.