New Investors: Read This Before You Start Trading!

Different people see investment and trading in different ways. For some people, it’s not much better than playing roulette. For others, it’s a fine science, and has absolutely nothing to do with luck. If there’s one attitude you don’t want to have, it’s that trading is an easy way to make money! so many rookies get chewed up by the markets by making ill-informed mistakes. Here are a few you should be aware of.

One of the most damaging mistakes you can make is thinking you have a sixth sense for trading. Okay, maybe you do have a certain amount of intuition when it comes to business and economic changes. However, you won’t have much success in trading if you go with your gut instinct on all big decisions. Some traders can come off as cocky, I know. Don’t let this attitude make you think that they’re all winging it though! For the best start in trading, you should be relying on logic, solid information, and proven strategies. Sure, you might come across a small up-and-comer once in a while who’s worth investing in. Just make sure you’re making decisions based on evidence, and not emotion.

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Source: Wikimedia

Another big mistake is starting to invest before you know enough about it. Let’s say worked as a higher-up at a business for some time, and watched certain markets explode and crash. In this position, it can be easy to think that you’ll pick trading up as you go along. Believe me, you’d have to be extremely lucky to jump right into trading, and still get good returns. One of the most important things in trading is having a good understanding of how it works. If you want to go into Forex trading, then start learning how to study charts and make predictions. If you’re going to be trading in dividends, then start reading specialised blogs such as dividendmantra.com . The more you know about your market, the easier it will be to profit from it.

Finally, don’t take too long to close the trade. Countless rookies invest some money, watch it grow, and then stick with it without keeping up-to-date on the asset. Sometimes it’s down to belief in their own intuition, on thinking that the stock will continue to rise in value indefinitely. Whatever the reason, this usually ends up with the newbie learning a hard lesson, and losing all their invested capital. Starting finding out about how assets plateau, and how you should act according to shifts in the market. If you hang onto an asset that goes into a nose-dive without you noticing, then you’ll be in for a nasty shock! After a big loss, some newbies panic and immediately re-invest in a poor stock, which takes us back to my first point. It feels great to win, I know. However, it’s extremely important to know when to close a trade.