Traders come in all shapes and sizes, but we can narrow it down to two types. There are risk takers and those who play it safe. By definition, trading is a risky undertaking. It always has been. Despite our best efforts, it’s impossible to predict the direction and magnitude of price movements at any time. We use a variety of trading tools and resources to gauge the performance of the markets. These include technical and fundamental analysis.

By and large, trading platforms sell the hype with lofty promises of significant returns and comfortable retirements. Regardless, there are no guarantees. Stakeholders in the financial markets – particularly those with something to gain from unsuspecting traders and investors, are single-minded. They want to generate as much profit as possible in double-quick time. Hence the presence of fraudsters, shell companies, and less than honest financial reporting.

But it’s not all doom and gloom if you know how to walk the walk and talk the talk. Whether you are trading stocks, commodities, bonds, currency pairs, crypto, or indices, you’ve got to play by the rules. They are designed to protect you from all the noise. All stocks are traded through stockbrokers – individual stocks, exchange-traded funds (ETFs), mutual funds, et cetera. Finding a reputable broker is your first point of call. Stick with the big ones if you must, but know that there are many other non-mainstream reputable brokers out there.

How To Safely Deposit Funds?

When you transfer money from your bank account into your trading account, that’s when the rubber hits the road. At this juncture, you want to be 100% sure that the trading platform is licensed and regulated, credible, and highly recommended. The last thing you want is a convoluted set of terms of conditions. You’ll want a clear and concise withdrawal policy that makes it easy to cash out your winning trades.

It’s much the same across the board whenever you deposit funds in anticipation of a favorable return for any trading, investment, or gambling-style activity. Ensure that you meet all the requirements of the trading platform to avoid any delays in processing. Use a reputable payment method, and provide biographic ID, proof of address, and contact information. Top-tier trading platform customer support can walk you through the process.

What Is Your Trading Strategy?

Everyone knows that it’s best to buy low and sell high. But that’s not the only trading strategy that you need to know. Traditionally, that was the only sensible way to make money. However, you may be surprised to know that you can short stocks, commodities, indices, and currencies and still make money.

Trading strategies revolve around your understanding or desire to understand the financial markets. By trading CFDs, for example, you are not actually trading the asset – you are trading a contract. It’s possible to generate favorable returns in rising or falling markets. With a CFD – contract for difference – you are exchanging the value between the time you open the contract and the time the contract is closed. These are known as derivatives.

Use Trading Tools and Resources

You don’t need to read ‘smoke signals’ or wait for CNN business, Fox, MSNBC, BBC, or any other network to provide you with information. In fact, by the time you’ve read it online from a journalist, it’s probably old news. It’s best to follow the markets in real-time, with economic indicators such as GDP, inflation, interest rate, jobs numbers, housing starts, PPI, and others.

Use stock scanning tools and charts with indicators (simple moving average, exponential moving average, Bollinger bands, RSI, oscillators, et cetera) to try to gauge which direction markets are moving. In fact, your most valuable indicator might well be something like the US dollar index or the volatility index (VIX).

It’s Going to Take Lots of Practice – so Be Patient

Rome wasn’t built in a day, but neither was Warren Buffett’s empire. Anyone and everyone who wants to hit it big, or at least be comfortable through trading activity, needs to understand that it’s about the long-term, not one-hit wonders. Some people have fantastic luck and can score a big win on a single trade – the rest of us are left to work hard with incremental gains.

It’s better to have multiple small winning trades on a consistent basis than one big trade that generates returns. With trading and investing, it’s never a destination – it’s a journey. Buy dividend stocks to ensure steady returns over time, even in bearish markets. Diversify your portfolio to include higher interest-yielding payments with things like I-Series bonds during inflationary times or gold and standard government bonds to hedge against a downturn in stocks.

By Sumeet Manhas

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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