Stock Market Trading for Beginners – Official Olymp Trade Blog

Beginners Guide: 5 Tips for Beginning Traders – Official Olymp Trade Blog

Written by Olymp Trade Team | Aug 15, 2022

Trading is a great way to accumulate capital and achieve your financial goals. The best way to begin a journey to success is to ensure you're walking in the right direction. Today's guide will help give traders the best mindset to take advantage of their opportunities 💸

Contents:

  • Research and Guidance Makes All the Difference
  • You Don’t Have to Purchase a Stock to Invest and Trade
  • Trading Isn’t Gambling
  • Limit the Amount of Sources You Consider
  • Take Steps to Mitigate Your Risk
  • Time to Stop Being a Beginner

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Explanations and definitions of terms.

1️⃣ Research and Guidance Makes All the Difference

As you begin your journey into the financial world, you will learn many things you never knew how to do or even knew existed to begin with. You need to know how to read charts and graphs, map entry points, theoretical strategies, research, and many more skills. All these skills will fall under the umbrella of two major forms of analytics: fundamental and technical analysis.

Fundamental analysis is essentially applying research on current events and real-time factors that will impact the value of a company, commodity, or other assets. For example, if your local banking establishment has a rapid change in its lending interest rates, you investigate and find that rapid change is a trend among all banks in your country. You can apply that knowledge to a Forex asset involving your currency.

Technical analysis is a more hands-on set of tools that create graphs and charts that you can use to understand real-time volatility factors such as the support and resistance of a chosen asset under supervision.

In tandem with a chosen strategy, these tools can provide key indicators for successful trades.

2️⃣ You Don’t Have to Purchase a Stock to Invest and Trade

The conventional thought among most beginning investors is that the only way to trade and enter markets is to purchase an asset and trade it in the traditional sense. This is not true, some firms offer trading with stocks, commodities, indices, currency pairs, and cryptocurrency as underlying assets.

In layman's terms, this means that traders can trade on live markets without purchasing assets. This generally has a lower entry cost to the market and reduces the overall risk the new investor is subject to.

3️⃣ Trading Isn’t Gambling

It is important to understand the difference between investing to build wealth, and gambling to earn income. While many variables are working actively on any given asset that can seem random and involve risk, they are quantifiable. They have assigned value that has the potential of growth, among other mitigating factors.

Perhaps more importantly to state here is preparation. To successfully navigate your way through the markets available to you, investing your time into learning, honing your skills, and applying yourself to the process is extremely important before investing your hard-earned money. When gambling, you may get away with randomly picking a color on the roulette table. However, this is not the case for long and short-term investments.

4️⃣ Limit the Amount of Sources You Consider

These trading tips may seem counterintuitive. The common thought is oftenthat the more information you have, the better opportunity you have for success. This may be true in some cases, but you need to think carefully about the information you receive.

Quality over quantity speaks volumes when considering important decisions for your health and well-being. You wouldn’t trust a semi-qualified or partially-qualified physician. The same should be true of your financial well-being. Take the time to find a credible source of information and limit the amount of sources you consider to keep your research focused and accurate.

5️⃣ Take Steps to Mitigate Your Risk

Understanding that making profitable trades on the market can lead to financial success quickly is possible, but that it is equally possible to lose capital during trading is critical. It cannot be understated that a set of internal rules for yourself is important to limit losses.

Take into account the amount of time you spend trading each day, manage the time you rest, and set a total loss limit that will immediately result in you stopping trading for the day. These basic rules will make sure that relatively small losses remain exactly that - small losses.

Many investment strategies calculate the risk of loss into their investment amount during each trade. Take the time to research and find the strategy that best fits you and adhere to it strictly.

Time to Stop Being a Beginner

Armed with these tips for trading and knowing common market facts, you are ready to begin learning about the finer details of trading. If you are interested in taking on more information about trading strategies and feel like you have the fundamental knowledge this guide provided for you, open a demo account at Olymp Trade.

You can learn more information about Olymp Trade accounts in our Help Center.

Start honing your trading skills, learn new strategies and find the trading style that fits you best in a controlled, safe, and accurate environment.

Once you have mastered the skills you need to enter the live market, you will be set up for success and can take your first steps in the correct direction toward financial opportunities with the knowledge and experience to make educated decisions.

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Risk warning: The contents of this article do not constitute investment advice, and you bear sole responsibility for your trading activity and/or trading results.

Opening a transaction is frequently called "entering the market".

The underlying asset is the financial asset on which the price of a derivative instrument is based. Examples of underlying assets include stocks, crypto, and currency pairs.