It does not matter if you want to trade cryptocurrencies, stocks or if you just want to invest. There are 3 things that everyone needs to have or know before they can even start trading or investing.
Trading and investing are ways to exchange your assets against tangible value. This value is often derived from either a service or a good (e.g., commodities). You either can enter the trade by expecting the value to increase (go long) or decrease (go short), depending on your strategy. To be able to trade your assets, you must use an exchange. Imagine yourself needing an apple. To obtain your apple, you must go to a supermarket or to a local apple-tree to get it. It works the same way with stocks and currencies. Trading can only happen over an exchange. Learn the language of the exchange and make the best deals by mastering it. However, be sure to bring some money, otherwise you will not be able to engage.
So, let me point out 3 things you need, to get started with buying and selling stocks or currencies. Make sure to read every point since I will give some tips on the way.
- Choose your exchange – Choosing your exchange is of paramount importance, especially when you are starting out. The first exchange can make or break your experience in trading or investing for you. Make sure you use an exchange with a beginner-friendly interface. In the beginning, it is vital to get used to the tools of a regular exchange, such as the limited order, the stop-loss, and the stop-limit function. The faster and better an exchange shows you what these tools are and how to use them on the chosen platform, the better your trading experience will be. So, be sure to choose your exchange wisely. As soon as you think you mastered your exchange, do not stop there. Try out more platforms and use more than one exchange in the long run. Being friends with many exchanges helps you to avoid downtimes or outages of specific exchanges.
- Start capital – Every trade needs money. Remember, we exchange goods or services in the form of value for money. So, be prepared to spend some money. However, never invest more than you can afford to lose, especially when you are starting out. You will lose money, and the chances of you losing money, in the beginning, is far greater than when you have experience. So, reduce your order size, meaning, invest less money while trading. Start out with 5% of what you initially planned on trading. Just to get the hang on how the tools work. As soon as you feel confident and you think you can trade more value, do so. Use an approach, do not just throw your money into the markets. Use a strategy.
- Strategy – Having a strategy will help you to stay in the markets for much longer. Just throwing around money has nothing to do with trading. You need an edge, something that gives you a reference between all these charts and ideas. Use the strategy to focus your attention. It will bring you consistency into your trading, making it easier for you to find the right perspective. Ensure that the strategy you chose matches your personal understanding of the markets. This is highly important since tons of mentors sell you the holy grail of trading that does not exist. Do not fall for these traps. Finding out how you understand the markets is essential. As soon as you have the basic understanding, find someone that matches your understanding, and then focus on that. Do not get distracted by all the gurus. Concentrate your focus like a death-ray and make your strategy work.
I want to give you guys a bonus:
Always use a stop-loss – It does not matter whether you trade low-volatility markets or high-volatility markets. Having a stop-loss in place will surely save you a lot of money. A stop-loss is triggered when the price hits a specific value. The stop-loss sets a limited sell order at the chosen value and sells off for you by doing everything automatically. Having a stop-loss is like having a protective dog. It will bark when someone or something wants to hurt you, the same with the stop-loss. So be sure to use one.
To wrap things up, the beginning is not hard. However, staying in the markets for a long time is hard while trading. Be sure to have a strategy in place that protects you and your funds from significant losses, use an exchange that you trust, and have experience with while seriously trading. If you combine these 3 steps, you will become successful in the long run. Ensure that you stay consistent about your approach and do not let yourself be talked into something that does not exist (e.g., the holy grail of trading).
If you need any help trading, ensure subscribing to my email list since I am creating a beginner’s course. Until then, be sure to check out my blog for more useful information to get started.