Timing Your Personal Entry Point When most people hear about trading or managing their own investments for the first time they either have no interest at all or are immediately intrigued. For those that are intrigued an immediate itch starts to develop; an itch that can only be scratched by placing that first trade. This is a very natural occurrence as the thought of placing trades, making money, and getting in the game is an exciting prospect.
Here are five tips for those who are starting to develop that itch for the first time. Deciding when to enter any individual trade or investment is a critical step in determining whether your trade or investment will be successful. Deciding when to start your trading or investing career is just as critical to determining your long-term success as a trader or an investor. While you undoubtedly want to dive into the deep end of the pool, a little preparation and pre-planning can help mitigate some of the problems first-time traders encounter for the first time.
- Learn one strategy at a time. In the world of trading, there are numerous patterns, trade setups, strategies, and approaches to trading. In fact, there are so many that two problems occur for the new trader. First, they become easily overwhelmed which can lead to a quick exit from the world of trading. Second, they only develop a cursory understanding of many aspects of trading without fully developing an understanding of any of them. Starting with a strategy such as a breakout can allow you to master a profitable strategy and allow you to start making money on that strategy while you continue your education.
- Place virtual trades on the strategy you learn before moving on to learning a new strategy or placing live trades with that strategy. While there is no way to replicate the lessons learned from live trading, virtual trading can help new traders avoid some of the rookie mistakes that traders encounter.
- Develop your initial watch list with low-volatility stocks. Two stocks might be priced at $75.00 but one of the stocks might, on average, move three dollars a day and the other one might only move, on average, one dollar a day. While the one that moves three dollars a day might offer more rewards due to its higher volatility, it can also lead to greater losses. In your early stages, you want to make sure that you can live through the early learning curve.
- Enter the market when the broad market is experiencing low volatility. There are times when the broad markets are moving nicely along and there are times when there are dramatic swings up or down on a daily basis. There is nothing wrong with waiting until a clearly identifiable trend develops on the broad market before placing your first trade.
- Make sure you have the time and focus to learn how to trade. There are times in our lives that are busier than others and you would be wise to make sure your personal and work life is not too hectic before you add placing that first trade into the mix.
The markets will be there for the rest of your life. Exercising a little patience and discipline at the start of your trading career can go a long way in determining whether you will be successful or not.
- Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.