Beginner Trader Advices: 6 Tips you must read Now!
Published: 21 January 2021 by Andrew
Is becoming a trader easy or is it difficult? Are there some Beginner Trader Tips you should know before you start investing? And which are the most important?
Considering that there are so many questions of this type that we receive every day in the editorial office, we wanted to enrich this topic with a focus that we recommend you read immediately.
In fact, within these paragraphs you will find many ideas that can improve your strategies, and allow you to experience online trading with more serenity.
Therefore, we recommend that you take a few minutes to read these ideas.
If you are a beginner trader, without long investing experiences, they will probably be super useful!
If, on the other hand, you are a professional investor, with years of experience and success (or not!), They will probably be useful as a review, and as a basis for you to compare yourself with our staff and our community on these 6 trading tips for a beginner trader.
Now, before proceeding quickly with the reading of this in-depth study, allow us another small “bonus tip”.
If you want to get the best out of these tips and want to put them into practice right away, what you need to have is a demo account that will allow you to apply investment strategies and tips in an immediate and safe way.
We remind you that the demo account (which you find on all the platforms of the best online brokers, such as the official website of eToro and the official website of ForexTB) will allow you to:
- Improve the knowledge of your new reference broker, considering that you will be able to use all its services at no cost or risk;
- Experiment with these tips in a “protected” environment, considering that you will be using virtual money, and not your own funds;
- Put your trading strategy into practice in real market conditions, but with “simulated” results.
That said, there is nothing left to do but read further!
Beginner Trader Tips for Online Trading
The first thing we want to share with you is that it is clear that there are many strategies that can be used to trade on the financial markets.
Knowing these strategies is an uphill task for most beginners to online trading though. But for what reason?
It’s very simple! If you are just starting out, you may find it difficult to balance the time between learning and actual trading. Most of the investors who write to us are in a “hurry” to invest, forgetting that the opportunities in the financial markets were there yesterday, there are today and there will be tomorrow.
So, at any time you decide to enter the financial markets to do online trading, rest assured that you will always find interesting opportunities to take advantage of!
This is why it is important NOT to be in a hurry. And it is even more important to have enough information on the financial market and the sustainability of your strategy before you can invest with your real funds.
Many experts – and we follow this opinion! – They agree that the success of a trader depends on the preparation process, rather than on the way in which he faces everyday life. So, even before understanding what are the best tips to be successful in online trading, take care to keep in mind the fundamental importance of not getting caught up in the frenzy of investing at all costs.
Instead, it is better to delay entry into the financial markets, but to do so with greater conviction and awareness.
1° Beginner Trader Tip: Study online trading
Let’s start with the first piece of advice for a beginner trader which, perhaps, is also the most important: study online trading and train for the moment when you start trading seriously!
But how to study online trading?
Well, there are tons of ways to do it and … most of them are free!
On the web, for example, you will find many books on the financial investment market, which will allow you to have a solid foundation to venture into the sector. The financial market, whatever it is (stocks, Forex, etc.) is certainly not an easy market to “navigate”. You will indeed have to deal with a lot of volatility and rapid changes. And entering a context like this without an adequate training background will therefore expose you to great risks.
As a newcomer to online trading, however, there is good news!
Contrary to what could have happened years ago, in fact, it is not at all necessary to go to a real training institute to obtain the knowledge and skills you will need to be able to invest. Instead, you can simply use the various free online courses which, moreover, are also made available to you by the online brokers themselves.
Among the main ones, we point out this one of ForexTB (on the official website): it is a simple and complete resource that could be for you, and for those who are approaching online trading these days.
The course is free and explains everything you need to know, especially for a beginner trader. Do not make the mistake of those who start investing in Forex without even knowing what forex is and, of course, fail.
The materials to be studied must be carefully selected: it makes no sense to study the posts published on the stock exchange forums or the Wikipedia page dedicated to trading (unfortunately there are novice traders who think this is equivalent to studying).
2° – Use Stop Loss: Always protect the investments
The first piece of advice we have given for a beginner trader is therefore very clear: study! To be clear, however, is also the second: always protect your investments from excessive losses. But how to do it?
Well, know that in the online trading industry, many strategies are used to mitigate losses. One of the most common strategies of this type is the Stop Loss tool, which will help you establish the price levels of your reference asset, after which you believe that the risk of loss is excessive.
In other words, even simpler, the stop loss is the price level that you believe corresponds to an unbearable loss, at which the broker will automatically close your position.
Precisely this feature is one of the main advantages of the stop loss, which works even without your supervision!
Therefore, all you will have to do is provide exit points from the position, and the rest (price monitoring, the action corresponding to the stop loss) will be managed entirely by the broker. Easy, right?
Of course, understanding how to use a stop loss correctly is not as simple as understanding its basic mechanism and, therefore, it will take some practice to familiarize yourself with the trading strategy with stop loss and Take Profit, its corresponding “positive” (that is, the take profit is that price level at which the broker will automatically close your position in profit, since it coincides with a profit threshold that you will have deemed satisfactory and satisfying).
As you may already be imagining, one of the best ways to practice stop loss is to open a demo account with one of the best online brokers, such as eToro (official site).
In this way you can practice for as long as you want in a safe and professional environment, without risking your funds: the virtual money that the broker will have allocated will be used to allow you to approach online trading with greater experience!
3° – Practice with the Demo Account
Given that we have just mentioned it, we cannot go back to the fact that, after acquiring a good theoretical knowledge on online trading, it is essential to do a lot of practice.
Learning how to effectively minimize the risks associated with online trading takes time and great dedication. And, fortunately, contrary to the past, today a beginner trader has many options at your disposal.
The first option you should consider as a beginner (but the good advice obviously applies to professional traders too) is to use a demo account. Such a service is really essential to practice, because it allows you to do whatever you want without risking your money. Using a demo account offers you a “real” trading experience, which you can use to make profits when you finally decide to use your money, but without the dangers associated with trading with your funds.
In short, the context will be that of the financial markets in real time, but the result of your operations will be fictitious!
4° Beginner Trader Tip: Stay focused on your goals
Beginners to online trading often tend to lose focus on what is really important. In fact, trading requires optimal attention to achieve significant results, and your attention can often be influenced by rapid market changes.
A trader who works with passion is certainly a trader to be encouraged but … he is also the one who will tend to lose more, compared to the trader who instead works with more method and reasoning.
He remembers that emotions can lead you to make irrational mistakes during online trading sessions, and that over 90% of traders give up because they believe they are unable to make good investment choices.
If you want to avoid running into this dead end tunnel, try not to invest on the basis of your emotionality, but always act with rationality, based on a well-defined and tested trading strategy through the use of the fear account.
Read also: Trading Strategies.
5° – Don’t exaggerate with analysis
This advice may seem like a paradox and … it is only partially!
A piece of advice we would like to give to a beginner trader is to stick to some proven strategies and avoid overdoing the analysis!
In fact, many newcomers to trading tend to assume – falsely – that using as many strategies as possible will be a privileged path in order to quickly reach the best possible result.
In reality, this is not always the case. Or, indeed, it is almost never like this!
In financial investments, in fact, the more strategies you use at the same time, the more likely you are to get confused.
Therefore, as a beginner of online trading you should limit yourself to using only a few strategies that have given proven results in your testing phases with the demo account. Then as you become more experienced, you can also try to experiment more integrations between the various strategies, and try to arrive at the definition of the most useful mix.
In short, even if it might seem a contradiction to the advice related to studying and practicing, remember that most beginners in online trading succumb because they have chosen to excessively analyze the financial market on which they want to invest.
6° – Don’t let possess put you off
The last piece of advice we want to give to all the beginner trader communities who are reading us right now, is not to let the losses discourage you (even if they will, at least in part!).
In fact, remember that patience is the key to success in online trading, and that there is not a single trader who has not lost some positions (actually, many more than some!).
Taking out some positions at a loss is not necessarily a bad thing. The important factor should instead be to bring home the right lessons from what one has experienced. Therefore, if a position has closed at a loss (with activation of the stop loss, we assume), try to take advantage of this opportunity to understand what went wrong, and what could be better next time.
Did you close at a loss because you did not correctly analyze a certain situation? Or maybe because you failed to examine a fundamental element?
Try to understand this, to write this experience in black and white – it might be useful to keep a record of wins and losses, and treasure it.
Remember that strategic consistency is the most important factor in success in any online trading “adventure” and that if mistakes are part of the learning process, it is true that experienced traders already know the most common mistakes to avoid. The goal should therefore be to take note of every move that led to a loss and those that were successful, in order to get the best insights from each operation.
Read also: Make Money with Amazon.
We hope, with our in-depth analysis, to have provided some useful information to be able to arrive at the definition of a first approach to online trading.
Remember that in order to try to embark on a sustainable investment path in online trading it is important not to be in any hurry, and to take each step with the right calm:
- Put the teachings into practice in a demo account
- Only when you are ready and believe you have done your homework correctly, try to invest with real money.
What do you think? Is there any advice for newbies that you think is important to know?