Let’s be honest! Trading can be quite a confusing subject and even more tedious when explained by a monotoned guy who can’t keep a crowd of five-year-old kids awake. However, we cannot afford to sleep on the stock market! We should be wide awake and ready for action at any point.
If you are here, then you probably are interested in trading and wondering how to get started. Before you take that step, ask yourself a few simple questions.
Question 1. Why I Should Start Trading?
The first thing you need to get clear about is why do you want to start?
There could be million different reasons why one might get into trading, but in general, the most common is simply MONEY.
There is nothing wrong with that but try to get clear on what money represents to you. Is it paying off the debts? Or is it being financially free? Maybe to escape the 9-5 job you hate?
Whatever the case may be, you need to answer the WHY? Having a general idea of where you want trading to get you to will set you up for realistic goals and a clear plan.
Trading is not a get-rich overnight scheme – so your reason is critical because it can keep you going when things get hard.
Question 2. What Asset Classes Catch Your Attention?
Once you figured out the WHY it is time to answer the WHAT? What asset are you more attracted to?
There are different types of asset classes, such as:
- Stocks – Trading stocks of individual companies like Amazon, or groups of companies like S&P 500.
- Forex –Buying and selling of currency pairs, like EUR/USD
- Commodities – gold, silver, and oil are called commodities
You need to figure out what inspires you and gets you motivated to start and keep trading. If you don’t find it interesting, chances are you will not participate actively. Especially on a daily, on-going basis.
Question 3. What Trading Style Looks Best On You?
Now it is time to define what kind of trader do you want to be. First, try to figure out how much time you can afford to contribute. This will make all the difference when choosing your strategy.
Let’s go over a few types:
- Do you see yourself as a scalper? – make small trades here and there, which make you big profits.
- How about a day trader? – trade regularly but never leave an open position overnight.
- Swing trader? – open trades and keep them active for days to weeks and even months.
Which style suits you best? If you have more questions about trading that we didn’t answer, let us know in the comments below.