Trading Tips for Absolute Beginners

Trading is a money-making mechanism that has a lot of appeal. It’s a merit-based system that allows you to use nothing other than your ingenuity to make money. You’re not providing a service. You’re not making anything. The only thing you did was recognize the growth potential behind one stock or commodity before anyone else.

Still, how do you get started? 

Imagine a scenario where you’ve thought about trading for so long and want to get started. What would be the starting point? How do you choose what to invest in? How do you do your research? Where do you place your trades, to begin with?

So, here’s a brief guide for absolute beginners aimed at helping you understand just how easy it would be to get started if only you dared. 

Picking the right platform (and learning how to use it)

The first step on this journey is choosing the right trading platform. You see, while the majority of these exchanges offer similar features, there are still situational considerations that you need to make. So, you must research and pick the best investment app for your situation.

Remember that you’ll spend hours upon hours watching at this interface, which is why even making personal preferences makes sense. You can dismiss an app just because you dislike its UI. As long as it’s one of the apps from the top of the list, you’ll do fine. Ideally, you should look at some reviews and potentially even watch a few tutorials to see this platform in action.

Once you’ve chosen it, you must download an app and deposit some trading funds. Remember that, on most platforms, there’s a minimum that you can deposit. Still, this minimum is usually just $10 or $20, so it shouldn’t be too expensive if you want to try out a platform. 

The trading process varies from platform to platform, but these tools are designed to be as simple as possible. These platforms are not aimed at Wall Street traders but at regular people (without a background in finance). This means all the commands are self-explanatory, and you can execute most orders with simple clicks. 

Learning how to research

Next, you need to learn how to conduct a technical analysis in trading. First, you need to learn a few trading terms. You would be surprised to learn that some people join the trading world without even knowing what words like bullish or bearish mean. 

Next, get familiar with trading patterns. You can look up historical charts or even consider finding some charting strategies to learn. Many people enter this world believing that they can somehow just understand these charts by looking at them. This is nothing short of a beginner’s overconfidence.

Another thing you need to do is filter your sources of information. There is a lot of advice, but it’s your priority to single out which blogs, newsletters, and sources seem the most trustworthy. Then, you need to follow them and do your best actually to read, not just skim through headlines and subheadings.

Some people learn by copy-trading. This means they find a successful trader and copy them until they’re proficient enough to do independent trades. The biggest problem with this strategy is that people often get so reliant on these traders that they get lazy. In other words, they start seeing this as a permanent solution.  

Having an analytical mind is a concept with no alternative, and you must figure out how to practice this trait. 

Related reading: Simple Trading Strategies

Trust the professionals

A lot of people trade on impulse, which is one of the biggest mistakes that you can possibly make. Why? Well, because your most common impulse will always be to hop on a bandwagon and trade just like everyone else. 

If you chase trends, you’ll always end up losing money. How come? Well, your cue to start selling will be that the asset is going down, and your impulse to buy will be when the stock starts going up. This way, you will always sell cheap and buy expensive. Instead, trust more experienced investors.

Also, remind yourself that you’re not at the gambler’s table. All your decisions need to be data-based. When you feel the urge to make an impulse purchase/sale, do this with a small portion of your investment fund, only the money you can afford to spend. 

One tip that you’ll always receive from industry veterans is to diversify your portfolio. This often seems counterintuitive to a new learner, mostly because they seem reluctant to split their attention. At their very best, they’ll study one asset type in-depth, and delving into another will seem like a terrible mismanagement of their resources. It’s, once again, important that you take the word of specialists for it. 

Develop realistic expectations

If you expect to get rich on your first trade, you’re bound to get disappointed. While some people have made a fortune trading, this doesn’t mean they’ve made it overnight. Some people have a knack for recognizing good prices, but it takes years for this to fully capitalize. 

Just look at how people are setting up their stop orders. They set their stop-loss and take-profit orders. They set it up so that they lose up to 1-2% and win up to 5-7%. This way, if they’re lucky, they can make money with just 25-30% of successful trades.

This also means two things. Don’t get discouraged if you lose money on most of your trades. Sure, as long as you’re profitable in the end, everything is great, but, at the same time, it never feels good to lose 70% of the time. A lot of people get discouraged or impatient. This is when they start making risky trades and start losing serious money. 

You need to aim to avoid this whenever possible, and the best way to do so is to develop realistic expectations. By knowing what to expect, you can avoid these scenarios where you feel like things are not going well enough.

This is not a get-rich-quickly scheme, and if you expect this, you’re bound to end up very disappointed. 

Networking to Success

Your best source of information is often other traders, and there are so many spaces where you can meet these people. There are forums, subreddits, and social media groups where people exchange information, and if you’re serious about trading, it’s in your best interest to join as many of these as possible. 

While some may be skeptical about the power of these online communities, in 2021, the world stood still as Reddit organized a short squeeze on GameStop stocks. This shook the trading world to its foundation, and many people started paying attention to online murmuring. 

The best part of it all is just how easy it is for anyone to become a member. Social media monitoring is a key part of any industry’s intelligence in the 21st century, and trading is not an exception to this rule. 

Remember that the information coming from these sources is often unverified, and people love to write random tips on social media (for attention). In other words, while you can occasionally learn something useful, it’s far safer to treat this as anything else you learn on social media – with a grain of salt.

Starting out as a trader is easier than you think

The bottom line is that starting as a trader is much easier than you think. You only need the right tool and a few dollars on your account. Add to this a bit of proper research, some networking, and the right mindset, and you’re already doing things better than some of the most seasoned traders. There’s always room for improvement.