Share Trading

To trade or not to trade… That is the question…

So my YouTube feed is full of get rich quick schemes… everything from legit opportunities from the world of franchises to all sorts of business coaching services. It’s probably, because of my cookies and all of the wonderful articles I have to moderate for the site… One thing that intrigued me was the many share trading platforms promoting themselves as the place to become a slick city investor and set me off on my path to fortune and success.

Now I know a few things about finance… I’ve got an investment banking background and I understand the terminology for interpreting financial data. So you’d think it would be a piece of cake right? Wrong! First and foremost, the skill set to become a successful trader is not all about academic knowledge or financial experience, it starts with evaluating what type of trader you want to be… day trader, swing trader or longterm – all have individual strategies that doesn’t guarantee success, but provides you with a working pattern to follow. I opted to day trade and looked to maximise my income from the volatility of market conditions. You will really only find sudden movements in the forex and commodities markets where external factors often influence the stock price. When trading Crypto or digital currencies, the market seems to be a bit unknown and solely based on supply and demand factors with Bitcoin leading the pack and others following significantly behind.

When placing trades you have three options:

1. Buy – this is where you buy stocks or shares and realise the appreciating value as the market goes up.
2. Sell – this is more commonly known as ‘shorting’ where you are actually speculating against a stock and profiting from the loss.
3. Order – this is where you execute a trade at a given point, usually after analysing the charts and placing your bid at a price where you anticipate the market to react.

Within these trades there are further processes that are essential to learn, they include

• CFD – The contract for difference (CFD) offers traders and investors an opportunity to profit from price movement without owning the underlying asset. It uses a market tool known as leverage where you an profit from a stock at a higher value but also not forgetting, losing too!
• ESMA – The European Securities and Markets Authority (ESMA). ESMA, the regulatory body state that an investment firm must display a specific risk warning, including the percentage of losses experienced on a CFD provider’s platform. This should deter novice investors and help them understand the real risks to their capital.
• Stop Loss / Profit – This is the amount you set in the event of a stock rise or fall. it’s designed to protect your equity in the case that you are not glued to the monitor all day.

Can you money?

The simple answer is yes. You don’t need to be a financial analyst or have any real understanding of how markets works… in truth you need some good fortune and lots of time to see how the stock operates to assess the volatility in the market place. A good starting point is to invest in a stock, one that you know of and that is unlikely to be a risk to your capital. Make use of the virtual trading accounts offered my most of the leading platforms and see how the market responds. Look for external news sources that influences your stock and try to find trends. Allocate a sum of money that you can afford losing and when you feel ready, go live with a few trades. Most of the leading platforms such as eToro provide a social element to your trading experience where people from all over the world comment on their trades and share information.

Remember, this is unlike online gambling where the thrill or enjoyment of the game sometimes can make up for the loss. When you lose money on a trade it hurts. It can be instantaneous if you have high leverage without a good stop loss in place. Your hard earned money gone in seconds. More people will lose money trading than make money. A sobering thought…

Should I attend a course?

Possibly… they won’t guarantee you a wealthy stock portfolio, but will explain some essentials and trading techniques. There are a ton of free learning materials on YouTube and the best experience is to try trading with a virtual account. A good mentorship programme is worth while and speaking to or learning from experienced investors is also really useful. But remember it’s really going to be you a screen and button, so the best lessons are learned when executing your own trades.

Should I do it?

Probably not! If you have to ask yourself that question especially… You need to first of all evaluate your financial situation. Secondly make sure you understand the risks to your capital. Lastly, make a fundamental choice to learn the industry and take time to understand reading bar graphs and financial data.

Good luck! Your going to need it!

Marcus Green is the Editor of Start Your Business Magazine

*******Update******** Trump’s tweets can influence stock market movements. Yikes!