As we step into 2024, global trade is expected to see a significant uptick, driven by lower inflation rates and increased economic activity in key regions such as the US and Asia.
This revival in trade offers an opportune moment for individuals considering a career or side hustle in trading. Not sure how to get started? Here we’ll go through the basics to help you get things off the ground.
Markets Available to Trade In
- Stock Market: Buy/sell shares of public companies (high risk/reward)
- Forex Market: Trade currencies in pairs (international finance)
- Commodities Market: Trade raw materials (volatile, geo-influenced)
- Cryptocurrency Market: Decentralized trading of digital currencies (high risk/reward)
- Futures & Options Markets: Trade contracts on asset future prices (leveraged, high risk/reward)
Basic Trading Terminology
Understanding basic trading terminology is crucial for any aspiring trader. The ask price refers to the price a seller is willing to accept for a security, while the bid price is what a buyer is willing to pay. The difference between these two prices is known as the spread, which can affect the profitability of trades. Volume represents the quantity of shares or contracts traded during a specific timeframe, demonstrating market activity and liquidity levels.
Liquidity itself is a measure of how easily an asset can be bought or sold in the market without affecting its price. Markets can exhibit different trends, such as a bull market where prices are rising, or a bear market characterized by falling prices. Understanding these terms assists traders in making informed decisions and effectively navigating market dynamics.
Key Steps to Get Started
- Choose a Reputable Trading Platform: It’s essential to select a reliable platform. Tradu, for example, offers a user-friendly interface and comprehensive tools suitable for beginners.
- Open a Trading Account: Provide necessary identification and financial information to set up your account.
- Fund Your Account: Deposit funds into your trading account, ensuring you only use money you can afford to lose.
- Develop a Trading Plan: Outline your trading goals, risk tolerance, and strategies to maintain discipline and manage emotions.
- Start Trading: Begin with small trades to gain experience, monitor the markets, and learn from each trade.
Risk Management Strategies
Diversification is a primary strategy, spreading investments across different markets and assets to reduce overall risk. Utilising stop-loss orders can mitigate substantial losses by automatically selling an asset once it reaches a predefined price point. Proper position sizing ensures that only a small portion of total capital is allocated to each trade, minimising potential losses.
Avoiding emotional trading by sticking to a considered plan helps in maintaining consistency and rationality, especially during volatile market conditions.
Resources for Further Learning
Numerous resources are available to help aspiring traders enhance their knowledge and skills. Online courses and webinars offered by trading platforms and educational websites provide both free and paid content on trading basics and advanced strategies. Books such as “The Intelligent Investor” by Benjamin Graham and “A Random Walk Down Wall Street” by Burton G. Malkiel are excellent for foundational knowledge.
Trading simulators offer a risk-free environment to practice trading without real money. Financial news websites like Bloomberg, CNBC, and Reuters keep traders updated with the latest market news and trends.
