The wonderful world of foreign currency trading and stock trading is nothing new but unless you’re a seasoned pro that has been at it a while, jumping right in with your hard earned money is a big step in the wrong direction. Obviously no one can tell you a guaranteed way to make money on the stock market or trading foreign currencies, but they can point you in the right direction towards a path to success. So put your head down and get ready to hit the books to learn how you can make it as a stock/forex trader.
- Learn: The first step to the whole process is learning. If you’re still in school or university, it would be very wise to take a few economics and statistics classes. These will help you learn about trends in the economy and how people value products. The more you can know about what consumers want, the better you can guess about future market trends.
- Study the market: Before you put any money into a stock or into a brokerage account to start trading, study things for a while. See how the market goes up and down and research companies that interest you. The best way to find companies to invest in if you’re just starting out is by looking around and picking out industries that make things you use in your every day life. The company that makes your baby’s diapers (the ones you buy twice a week), or the people that make the computer you’re using may be good options. See how they have performed in the past and watch them over a few month period.
- Diversification: If there’s one word you’re bound to hear over and over again in any economics or investment class, it’s diversification. The key to any financial success whether trading currency or stocks is to diversify your stock portfolio so if one company/country you’re interested in fails overnight or faster than you can analyze the situation, you haven’t lost it all. Some young investors put all of their money in a “sure thing” and lose it all the very next week.
- Time will tell: If you’re wanting to day trade (buy and sell the same stock minutes apart), this may not apply. The best thing to do is to plan in advance. Buying stocks to sell them soon after is not productive. Buy stocks that show consistent growth and can guarantee earnings in the distant future.
Note: If you’re interested in day trading, consult an industry pro. Sit in with them while they day trade for a few months so you can get a feel for it. It’s drastically different than standard trading. If you are ready to open an account, try etoro.