If you enjoy being actively involved in your investments, you may be interested in trading. Traders take advantage of small price movements to turn a profit. Starting on the right track is about understanding both the fundamentals of trading, and you as a trader.
The best investment you can make is in your education.
Do your homework – take the time to be educated properly. Learn the intricacies and factors that impact “day trading”. Make sure you understand principles like technical and fundamental analysis, strategy, and risk management. Keep up to date by seeking out news and resources from trusted, knowledgeable sources.
You may need a hand in creating a trading plan and learning how to manage risk, so consult a licensed professional who knows what they’re doing.
Understand your limits as a trader
To ensure your success as a trader you need to make trading fit your lifestyle. Some questions to ask yourself are:
- How much time can you dedicate each day to the market?
- What is your risk tolerance?
- What trading strategies do you feel comfortable with?
- How disciplined are you willing to be?
Understanding these sorts of things about yourself will help you determine a trading plan and integrate trading into your life in a sustainable way.
Efficient money management is essential to being able to trade sustainably. Make sure that you have enough capital to trade with and only invest money that you can afford to lose. Avoid using money that is for short-term essential expenses, and make sure you have a healthy emergency fund.
Stick to the rules
Consistency is key – it’s important to maintain a balanced approach to your trading plan. Stay calm and avoid making decisions when emotional. Most traders follow a proven, tested set of rules when trading. This includes putting risk management strategies in place to minimise potential losses.
Active trading can be rewarding and exciting. To make sure that you get the most out of your trading experience you need to understand the market and create a trading strategy unique to you. To get you started on your trading journey try our FREE mini course to learn the fundamentals of trading on the ASX. Sign up here.
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