How do I get started trading? What approach should I take?
Mwangi from Beginnerville
Mwangi, after the last year or so in the market, one might ask why you would want to start trading. One might, but not me. I can understand the interest and the impulse. I would, however, ask you to ask yourself why you want to go down this path. If you want to trade as a lark, so to speak, as a hobby, or to add some interest in your life, jump in. If, however, you are looking to trade with real money in order to build your capital, then I have a different suggestion.
I suggest you first take stock of your capital. How much do you have available for trading? How much can you afford to lose? What impact would any losses have on you and your family? Once you establish you have sufficient capital to trade, you have established how much you can lose, and that you and your family are safe if you lose all of your capital, open a book, any book on trading and start reading. Let me restate that. Open any book on trading that is not about trading to achieve vast wealth, or any book that promises formulaic success, or any book on trading that tells you “anyone can trade their way to millions.” If you do start with any of these books, you will be starting down the trading path in the dark, on the wrong foot, and in big trouble. Avoid these and find a book (books) that real traders or investors have written about the reality of trading. Although there will never be a substitute for experience, you can learn much from people who have traveled the path successfully.
As I have said before, and others have written to me about, I suggest finding a mentor, someone who can personally enlighten you early and often about the “ins and outs” of trading. As well, sign up for a FREE webinar directed toward beginner traders. You should have no problem finding one of these on the web, as online brokers offer these to attract potential future clients.
I would suggest you start watching quality financial channels, such as Bloomberg and CNBC. As well, start reading financial publications both online and in print. The point would be to familiarize yourself with financial concepts, the terminology surrounding those concepts, and the voices that speak about those concepts.
Finally, take your learning seriously. Open your mind to the possibilities, but don’t swallow everything whole in eagerness. Take small bites, chew them well, swallow easily, and digest slowly. This way you just might avoid some of the heartburn many traders get from trading.
Trade in the day; invest in your life …