Financial Trading isn't for everyone! It takes a certain type of person! Do you think you would be a success at it? These tips can help you find out!
Looking to start a career as a financial trader can be a daunting prospect. But, there are some steps that you can take to ease yourself into the role. Regardless of whether you’re becoming a financial trader for a huge multi-national corporation or just carrying out some financial trading at home, we have some tips that will help you and compliment your trading style. But, before we begin, let’s take a look at why you want to become a financial trader in the first place…
Why Become a Financial Trader?
When most people think of financial traders, they get grand visions of Wall Street and lavish lifestyles. So, when people think about trading, they also think about money. It's understandable, financial trading does provide people with a good wage, as well as many opportunities to get your adrenaline pumping.
But, although there are some incredible upsides to financial trading, there are negatives as well, so you have to be a bit of a natural risk taker. Also, you must be incredibly self-disciplined and have a great drive to learn, much like an entrepreneur does. With these natural assets, you’ll hopefully be able to navigate the risk and receive maximum rewards. Here are our five steps that can help you achieve just that.
1. Assess Your Personality and Discover Your Trading Style
As we’ve already said, having the right personality is vital when you’re trading. Conducting a self-assessment of your personality, its strengths and its weaknesses will help you discover your trading style, and may even help you decide what to invest in.
You can conduct what is known as a SWOT analysis, which will measure your strengths, weaknesses, opportunities to learn and be successful and threats.
In doing this, you’ll start to build a mental image of the sort of trader you’re likely to be and the barriers that you’ll face in the trading world. By identifying potential barriers at this early stage, you’ll stand the best possible chance of overcoming them, so ensure that you assess everything from your analytical abilities to your emotional control to your flexibility. Most importantly, be honest with yourself.
2. Begin to Teach Yourself
One thing that you’ll quickly learn when you become a trader is that you have to be self-disciplined, hence the stringent personality test being the first step. Regardless of whether you work for a company in an office or just trade from home, the hours can be incredibly long, so a great amount of willpower and commitment is required to be successful. There’s no aspect of trading where this is truer than in education.
Before you take to the markets and place your first trade, you have to ensure that you’re knowledgeable about them. If you fail to learn about the markets, you’ll have no clue how they’ll react in times of volatility.
Markets move based on a number of different events, and you need to know how each event can affect you. Anything from wars to economic news can have a big impact on a market, so you need to know what is happening and when.
To help, many sites now offer tutorials. These can help give you a good grounding in market knowledge. But, as well as learning how the markets work, you also need to learn how to read charts and interpret data. This information can then be used to help you create a trading strategy…
3. Create a Trading Strategy that Works for You
A trading strategy is essentially a plan. Each trader has one, and every plan is different. The whole idea is that it’s unique to you, so it’s designed to complement your trading style and level of risk.
This clearly links to point one and reinforces the need for you to work out your trading personality. So, once you’ve developed a trading strategy that works for you, and you know what you’d like to trade, you’re ready to come up with a strategy that will work for you. Remember that you can trade everything from forex to commodities, and you can even try things like spread betting. The type of asset you’re trading will largely affect your strategy.
To do so, you’ll have to answer some questions about the way you’ll trade, including but not limited to:
- How much capital you’re willing to inject to start your account
- What your entry points and exit points are for an asset
- What type of assets/currencies you’re willing to trade
- How frequently you’re willing to trade/how long you’ll hold a position for
Once you’ve established at trading strategy, you’ll have a good idea of what type of trader you’ll be, as well as how much you’d be willing to risk. Of course, this strategy isn’t set in stone and, as your experience grows, you’ll improve your strategy. It’s also likely that it’ll become more complex.
4. Define What You’d Like to Achieve and Work out How to Get There
This is your final step before you enter the market. Most people enter the markets because they want to earn money. That’s almost a given, but how much money would you like to make? And how long do you expect it to take you?
If you have strictly defined goals, you’re far more likely to stay focused while trading, and it’s far easier to measure how you’re doing. Once you’ve set an overall goal and a timescale for achieving it, you need to scale it down. Split that into monthly targets, then weekly and then daily. Then, every day when you wake up, you’ll know exactly what you should achieve.
5. Try Before You Buy and Start Small
Nowadays, most brokers offer demo accounts. It’s wise to make use of these before you begin trading in active markets, as they will provide you with the opportunity to test your trading strategies and you can tweak them before you risk any of your own money.
Then, when you do begin, start small. The less capital you inject, the lower the level of risk that you expose yourself to. As time goes on, and you learn how to navigate the markets, you can increase this amount and grow towards your goals.
Follow these 5 tips and you can’t go far wrong. Get started today.
Are you a financial trader? How many of these steps did you follow? Let us know in the comments section below...