The 6 Essentials For A Beginner Trader

Trading the financial markets is fast becoming the most popular method for those wanting to grow their capital or create an extra income source. However, for the beginner trader there is a wealth information available that can seem daunting as you just don't know where to start. That's why in today's article we go through the fundamentals for a beginner trader so you can tune out to all the noise that is out there and focus on what will help you achieve your goals.

The 6 Fundamentals For A Beginner Trader

Below are six fundamentals for a beginner trader that you must answer and be focused to following every single day, even when the going gets tough. After all, it is about having a laser like focus to achieve your specific goals. Think about the markets carefully and use these six fundamentals as your business plan for the next six to twelve months as a beginner trader to ensure yourself the best possible chance of lasting success. 

1. Choose a market

The great thing about the financial markets is the fact there are thousands of markets to trade such as stocks, forex and commodities. However, beginner traders try to focus on everything not realising all these markets move very differently to each other and the fact professional traders focus on one or two things unless they are very seasoned and have a wider catchment.

As a beginner trader it is imperative you start of trading just one market, be it stocks, forex or commodities. This first fundamental step is hugely important as you will learn everything about that one market and build up a vast amount of experience within it. Once you have traded your first market successfully then move on to the next one each time building more experience and knowledge. After all, you can't focus on everything at once; things take time to learn and use successfully.

2. Choose a timeframe

Whilst day trading may seem like the ticket to all your troubles, if you work throughout the day why try to sneak out during your break to look at the markets and place a trade? That's just pure gambling and is common amongst beginner traders but not with professional traders.

Choose a trading timeframe that suits your current work schedule. If you are free to trade during the day then great, go for it. But if you can only trade in the evenings then focus on daily charts where you just trade at the end of the day taking longer term positions. You'll still learn a great deal and even make some decent returns along the way.

As a beginner trader it's important you get the most out of what you can do know rather than always thinking, and being disappointed, you can't trade a different way. The great thing about the financial markets is the fact you can fit it around your lifestyle and that is, in fact, a massive part of having trading success very early on as a beginner trader.

3. Choose a strategy

There are literally an infinite amount of trading strategies available across all markets. However, not one of those strategies will work 100 percent of the time. Understand this and be ok with it. The biggest killer for a beginner trader is trying to find something that works all the time when it is just not out there. In reality, you don't even need a strategy to work all the time to make you a return consistently over time. However, you do need a strategy that works for you.

The methodology, or strategy, you choose to employ should be one that you believe in whole heartedly as perhaps you've test it historically yourself. Or perhaps, it's just a very simple strategy as you know the simpler it is the easier it will be to trade and, most importantly, manage the trade properly.

Every trading strategy as a beginner trader should have specific entry and exit criteria. And no point in the markets should you be left wondering what to do; that would mean you are either trying to fight your own trading strategy or the trading strategy itself is not specific enough.

Of course, as a beginner trader you will most likely try a few strategies until you find one that suits you and one that you are comfortable with using. Don't be afraid to test things and create your own ones from ones that you already use.

4. Manage your risk

Trading is all about risk management. Do not trade with money you can't afford to lose and make sure you never risk too much on one trade. The impulse for a beginner trader is to risk far too much on one trade because they want results as quickly as possible; they want to be an overnight millionaire. Unfortunately, it takes time and proper risk management to build wealth but, fortunately, it can be very simple if you just follow a process.

Always know how much you are potentially going to lose on a trade and what the profit could be. If it just takes ten trades to wipe out your account then you are risking far too much as a beginner trader. Remember the more you trade the better you be but if you've blown your capital before you can get better then it's all just been a pure waste.

5. Manage your emotions

If you follow the processes above you should keep your impulses and emotions at bay as you will just be following your process. However, once you let fear of losing or the greed of more profits enter your mind then all that hard work will quickly go out the window. Keep your emotions in check by following your own process.

6. Keep on learning

Learning is fun, so keep this game exciting. After all as a beginner trader it is the best journey in the world. With Trader Prophets working with you, sharing our global team of traders and investors combined 50 years knowledge, the sky is the limit.

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