The stock market, the site of so much joy and so much sorrow, where you can make it big or be sent to the Poorhouse. It’s a game of sorts, and while luck certainly does factor into it, skills and knowledge are what separates the winners from the losers. In short, share trading is the art and science of buying and holding stocks for a relatively short period of time in order to make a profit. Traders attempt to take advantage of short-term pricing fluctuations in the market.
Trading is not the same animal as investing. Investing is when you hold stock market assets over a long period of time in order to gradually build wealth. Investors purchase stocks and hold onto them for years at a time, whereas those engaged in trade shares in Australia hold them for short periods of time, from only an hour to a day, a week, or for a few months. If this sounds interesting to you, then here are some tips on getting started in the world of share trading.
Open A Trading Account – To begin with, you will need to find a broker to make trades, there are many to choose from and each has its own set of specialities, including tools, interface, and features, so take the time to find the one that you feel best suits your needs and proposed trading style, and who will be supportive of you as you learn and grow as a trader.
Learn Stock Analysis – There are basically two types of stock analyses that you should learn. Technical analysis is used when making purchasing decisions based on historical stock trading data and purchase prices. Fundamental analysis is when you evaluate the company issuing the stock to discover its potential value. When employing technical analysis, you are attempting to forecast the stock’s potential future price by analysing its past price movements. The fundamental analysis approach entails studying the financial statements of the issuing company. For best results, one should use both methods in combination to achieve a broader understanding of where the market is going and what it means for your planned investments.
Set A Budget – It’s very important that you set a firm budget for your trades and stick with it. You can start trading with almost any amount, so start small and work your way up toward bigger, and yes, riskier trades. Never dip into funds that you need to make mortgage payments or other necessary expenditures with, that is a gamble that you will most likely lose, that way lies poverty! Start small, think big, and use common sense, don’t be tempted by shiny trades that look good but are risky, they are there to tempt you and will likely lead to disaster.
Make Your First Trade – Now that you have opened your account, set aside the funds to run it with, and done your research, it’s time to make that exciting first trade! Be sure to set firm entry (buy) and exit (sell) points and stick to them.
Good luck with your share-trading adventure!
