Trading online can be an exciting venture, with profit and loss around any corner. But new traders are especially prone to making simple mistakes which can cost them money. It’s a learning curve, of course, but here are a few things to watch out for when starting as a trader online…
1: Going in too heavily to begin
You might be tempted to go “all in” on a single investment, in the hopes of turning a big profit in a short time. Whilst this might work, it may be ill-advised. New traders rarely understand the markets well enough to pick out a big-hitter, so risking all of your capital might clean you out very quickly. Try spreading out your options, or investing less in one or two items to begin with, potentially by following what other successful traders are doing.
2: Not understanding markets
Trading is quite a complex system comprising multiple markets and thousands of items. Markets allow you access to different items, and they use different systems of risk and payoff, different timescales for trades and more. It’s a good idea to familiarise yourself with a market, its potential benefits and risks, before investing in it.
3: Not doing research
Do you like popcorn? Why not invest all your money in it? Oh, looks like the price of corn just plummeted because of a trade agreement in India. Your popcorn is worth half the amount you invested. All we’re saying it, the more research you do into an investment, the more likely it is to be a wise investment. Throwing money at random items might pay off, but it’s unlikely.
4: Ignoring trading tools
Trading tools are pieces of software which help you to trade. They allow you to read stats, analyse markets, set up notifications or even invest on your behalf. Ignoring their potential uses might limit your ability to make sound and profitable investments. Sites often provide free guides or tutorials to help you understand the basics (and more advanced) features of their trading platforms, so check them out.
5: Going it alone – check the forums!
There are fertile, active trading communities online. They share information and tips, warn each other about potential danger zones and more. Whilst it’s ultimately your decision what you invest in, monitoring the forums (or even posting in them) could be a life saver. New traders might also benefit from seeking expert advice or copying the actions of successful traders. Communities offer you more eyes and ears in the trading labyrinths.
Whilst you might be tempted to jump into trading feet-first, we recommend taking some time to understand the key elements to trading online, and how they might affect your investments. Get as much support as you can, whether it’s from an expert, another trader or just some useful tech. It’s often free, and could earn you a bundle.