The brand new trader will have a big challenge before them. Most people have invested before in some form or another, whether it be their 401(k) at work, an IRA, a CD at their local bank, or some other variation of these long term investments. However, while some of the principles that the money managers that handle your money will be the same as your trading, all of these things are very hands off. Trading is very active, though, and can leave you feeling confused if you are not able to keep up with the markets. This will determine your future.
Don’t worry. We have the resources here to help you get started and even be profitable. Here are some of the basics that you will need if you are brand new to trading. And, if you do have trading experience, some of these basic concepts might be worth a revisit just to keep your skills as fresh and sharp as possible.
Creating an Account
Before you begin, you will need to create an account with a broker. But, not all brokers are created equal. In fact, creating an account with a stockbroker is far different than working with a Forex broker. So, before you create an account, you need to figure out which type of trading is right for you. This isn’t hard as how you trade will be determined by your interests and the amount of trading money that you’ve set aside.
In the world of binary options trading there are a lot of things to consider. If you can grasp the risk factor, you will have an easier time with your everyday moves. This is something that comes with the territory, so just get this under control early. If you wait to long, you’ll run into all kinds of problems.
Each broker will have different requirements for how to sign up, but there are some pieces of info that are going to be the same across the board. You will need your name, country, and an email address. Stockbrokers will ask for more in depth information as per the SEC and FINRA guidelines that regulate these industries. Some Forex brokers might, too. Binary options brokers might be a little more relaxed with their sign up rules depending upon where they are located. You will also find that different types of brokers require different deposit amounts. As a general rule, binary options brokers have the smallest minimum deposit sizes at about $250. Some Forex brokers will let you deposit this little, too, but it’s recommended that you put in a bit more if you want to lower your risk of losing money. This will give you more wiggle room if you are off to a slow start.
Figuring Out What to Trade
If you’ve never traded before, you can get overwhelmed by the huge amount of choices that you will find. Figuring out where to start can seem impossible.
It’s not, though. Start with what you know. If you’ve created a Forex account, start with your home currency, and add on another that you have a familiarity with. So, if you live in the U.S., and are familiar with English society, adding on the British pound sterling to make the GBP/USD pair will make a lot of sense. The same goes if you are in Japan and are a fan of European football. You can add the EUR/JPY pair and have a starting point for learning more.
For the most part, when you’re starting out, you should stay away from the tougher, more complicated trades. In the binary options world, this means the exotic trades. In the stockmarket, it means to avoid selling short. And in the Forex market, you should try to avoid relying heavily on leverage. These tools all have times and places, but they are pitfalls for beginners and you should work your way up to using them. Instead, master the basics and when you find that you need to use these tools, use them. By demo trading you will avoid the things why people fail with their trading.
Don’t Do Too Much Too Soon
Many beginners find that they have instant success, only to lose everything a few days or weeks later. Some short term changes in your account size will be random, but the best traders are profitable long term. Your goal is to stay in the markets long enough to get to this point. By making big trades soon in your career, or by trading too frequently, you are putting yourself in a position where you are more likely to lose your money quickly. Avoid this. Take your time, study your potential positions, and then trade with a lot less money than you think you should. Keep this up until you’ve shown that you have a handle on what you are doing and are 100% confident that you are ready for the next level. Trading too much takes away a lot of your accuracy, too, which means that by trading often, you are going to find that you are not as profitable per dollar risked as you could be.