Do you have the desire and ambition to trade stocks for a living, but lack the necessary confidence? Don’t panic: this is no longer viewed as an exclusive field for professional traders or for people with a large sum to invest, although a small amount of capital is required to get you started with stock trading.
To help you out as you start your trading career, technology advancements have in fact turned this into a much more convenient environment, and you can now trade on your mobile devices while on the move. What’s better than going for a cup of tea once you’ve entered your trade and stop loss order online, after all?
Soon after starting this new career, you might be able to earn the same or more than your normal 9 to 5 job. But this often easier said than done. Trading for a living is not as simple – a lot of hard work is required in order to reach the levels you’re dreaming of.
Trading stock for a living is quite similar to starting your own business. If you have little knowledge or are a novice to stock trading, you must invest time and money to learn to trade and know the markets well: seminars and courses are among the best ways to discover the secrets to stock trading.
Before you start trading with real money, practice on a demo platform for a couple of months. Online brokers such as Interactive Investors provide free and easy-to-use virtual trading platform to help you get started and build up your confidence.
Always keep an eye on changes in management and operation plans of a company, as this is something that can cause share prices to drop.
For instance, the recent departure of CEO and CFO caused a stake-up in African Minerals Limited (AML), a minerals exploration, development and mining company with interests in Sierra Leone. Even for a usually reliable company like this, simple piece of news of a cut in production guidance for 2013 was enough to cause the African Minerals share price to decline by 10%, as reported in Reuters.
So where can you find out more about the latest happenings of the financial world in order to make informed decisions?
Most major newspapers like The Economist and international news agencies like Bloomberg and Reuters cover comprehensive financial news, business policy and economic issues. You can also keep yourself updated by reading financial magazines such as The Financial Times.
As part of their output, some online brokers provide free daily and weekly newsletters. You can even obtain a free copy of company annual reports from your broker.
But investing wisely and in an informed way is not enough: you’ll need to monitor your investment portfolio on a regular basis. Some brokers allow you to set up alerts to help you keep track of your investments and changes in the industry, and downloadable mobile apps make it possible to track the latest financial news. The Bloomberg app for iPad and MarketWatch by Down Jones & Company are also excellent sources of financial news.
With all of this in place, don’t just follow the updates blindly, but rather learn to read and interpret technical indicators. A sensible trading strategy can be developed based on your available capital, risk tolerance level and trading experience.
Overall, your success in trading depends on your commitment and patience. Do it only if this is what you really want to do for a living and you’re ready to make some sacrifices on the social side of things, at least for the first few months in this sector.