Preface: some things mentioned here in this tutorial and the others as well, may have been mentioned previously in other sections of the blog. It’s just all gathered here in an organized fashion to layout the steps.
The first question to ask yourself, Why are you trading?
There are many reasons:
- For fun, although not likely
- To get rich (fast), no such thing as a get rich quick scheme in finance, not consistently anyways
- Peer/family/societal pressures? Might’ve seen someone else do it and now you want to as well
- Secondary income, not a bad choice if you love your current career/job and need some extra cash
- Want to quit your day job and trade for a living, sure it could happen, not right away unless you have a lot of spare cash to fall back on, there’s a learning curve to everything
Whatever your reasons may be keep this in mind. The only certain thing in life is uncertainty, nothing is guaranteed, not even in finance so be prepared to make losses. The key is to minimize your losses, and maximize your gains. But most importantly, only trade/invest what you can afford to lose!
- If you just lost your job, and you want to trade for a living now. I would advise you not to do it right now. Don’t be trading with your employment insurance.
- If you’re in debt and can’t afford to lose money, don’t bother, you’d only increase your burde
Having said that and although some pro’s would argue this with me. How much are you willing to risk on this hobby/endeavor?
Different starting capital size will affect and should influence how you trade and what you trade. For example, if you just have a couple hundred dollars. Trading blue chip stocks may be out of question, since you’d only own a few shares and can’t really “trade” it. Investing would be different, but this blog isn’t about investing. I’ll probably make another section for that to explain it briefly, but you can’t trade a small amount of shares. It’s hard to make money, especially with broker commissions.
I currently focus on Forex, Stocks and Binary Options. Other instruments exist such as Vanilla Options, ETFs and Futures/Commodities.
- You can trade Forex with as little as $30-50 depending on which pair you’re trading given 50:1 leverage.
- Binary Options require a min. of $100-500 deposit
- Stocks vary between penny stocks and blue chips depending on your risk tolerance. Penny stocks, you only need a couple $100s, blue chips would require $1000s.
Regardless of what you pick, just get rid of the mentality that you’ll be rich by the end of the week or month. It’s not likely to happen, you may get lucky this week, then screw up next week. Think small steps, the one thing you need most in this financial game is patience. There is a learning curve in this game, might be harder for you than others. But you have to learn how the game works, master it then you start winning. Learning never stops, I’ve been trading 1.5 yrs now and I learn something new everyday or notice something I’ve never seen before. Whether you’re young or old, there are numerous opportunities out there, keep in mind it’s always better to miss a good trade than to enter a losing trade.
This is just a little intro to mind sets and approach to finance, for more info, refer to the emotion/psychology under education. Next, I’ll be walking you thru chart set up’s and what you need to do to be prepared for trading/investing.