Quick Guide To Making A Career Out Of Trading The Financial Markets
It’s a human trait: if we’re convinced we can spend less time doing something but still achieve the same end product then we’ll generally do it. And we’ll do this even though we know at some level that we are due for a fall if we do.
It’s the same with trying to make money on the financial markets, if someone tells us there is a short-cut to success then most of us will take it, after all, we’re all a lot smarter than average and therefore why shouldn’t we be able to make the same amount of money as those guys?.
Certainly there are lots of books out there that talk about how best to make money on the financial markets. There are also websites with free expert financial market analysis.
Some people will try to sell you their course to go on, while others will insist that their software will help you make more money faster. You know the sort of thing, those trading robots out there which will do all the hard work for you with just minimal input from you.
Learn, Learn and then Learn some more
There’s no real short-cut to acquiring the kind of knowledge you’ll need to make a successful trader, that said, it’s relatively easy to get up to speed as to what you should be looking out for. Financial markets are influenced by a multitude of factors. Politics affects the financial markets, whether it’s a major global political event or just a generalised feeling or sentiment surrounding the strength or weakness of a country’s leadership and direction.
Don’t worry you don’t have to go back to University to study political theory just make sure you have a higher-than-average understanding of what’s going on in global – and local ¬– politics. Economics, do your homework: countries have standardised ways of reporting how well they are performing economically. Trade balance, GDP, unemployment etc. Know your power bases in the global economy.
Country’s are required to release economic statistics, called economic indicators throughout the economic calendar. Make sure you know the dates of all the major releases and that you monitor economic analysts predictions and media reaction and gauge how the markets react. Try to read as many financial, economic and political newspapers and magazines as possible. You’ll also find that there are hundreds of free resources on the internet.
Initially it’s probably best to choose one market and learn as much as possible about it, here are three of the most popular markets:.
Forex
The most popular and largest financial market in the world is the foreign exchange (forex) market. {Its prominence perhaps lies in its broad appeal and the number and diversity of participants it attracts; from the world’s heavyweight commercial banks, hedge fund managers, right down to the individual. The forex market is appealing because of its liquidity and the sheer amount of money that is regularly traded}. It’s a good idea to learn as much as you can about how one country’s currency relates to another country’s.
Shares
A number of factors can affect the price of a company’s shares. While the underlying economic climate plays a significant role, it’s vitally important you know how to asses the financial health of a company.
Companies listed on the London stock exchange will release financial results twice a year and trading updates twice a year too. The figures give investors insight into how well the company has performed and its future growth potential.
It’s also key to gauge any media reaction the media reaction and whether they were more or less what economic analysts were expecting. Start with a company that’s share price isn’t particularly volatile, that way even though your profits won’t be massive, your losses won’t be either.
Commodities
There are common factors that influence all commodities. There is a lot of information about trading commodities available on the web.
But it is the extent to which these factors influence an individual commodity that investors and analysts pay special attention to.
Investors have traditionally seen gold as a good investment in times of economic hardship.
The price of platinum tends to rise in more stable economic times due to its specialist use in manufacturing.
To begin look for a commodity which has had a relatively stable price recently.
In conclusion
As you have seen, whichever market you pick it’s a good idea to choose financial instruments that are traditionally less volatile than others.
Which brings us on to the importance of risk management.
Successful CFD traders make risk management an integral part of their trading strategy. That is part of the reason why they are successful and remain successful.
One final point, before you put up any of your hard earned money gain some actual, physical experience of trading by using virtual simulators or demo versions of platforms.
IG Markets allow you trade CFDs on the world’s financial markets. They offer a free demo of their trading platform and free education and resources to help you become a better trader.
