Are you considering entering the exciting world of Stock Trading? Then you might want to consider looking at Forex CFD’s as a viable option. Forex CFD stock trading gives you the ability to speculate in stocks and other asset classes without actually owning the underlying product. So, if you want to purchase Apple stock for example, you can either go directly to the New York Stock Exchange and purchase physical shares of Apple, which typically comes with high commissions. Or, you can open a Forex brokerage account with a broker that offers an Apple stock CFD and purchase it there for much less typically.
While a lot of beginner’s out there approach the stock market with high hopes and visions of raking it in, few understand the inner workings and end up failing at what they set out to achieve. Based on recent studies released by ESMA anywhere from 70-90% of Forex traders lose.
If you are a beginner who wants to get into the swing of things with the stock exchange, you are in luck. We have compiled our own list of top tips that will ensure you are geared to make a success of your stock exchange experience.
1. Always be In Control
Never let your emotions get the better of you when trading stocks, whether they are single stock CFDs at a Forex broker or directly on the stock exchange. You’ll need to be able to have a positive and logical approach to your decisions at all times.
2. Know the Risks and their Effects
In order for you to remain calm and make logical decisions, you need to understand your risk tolerance. This will allow you to make better and informed decisions when investing in stocks.
3. Have a Long-Term Plan
You need to identify your goals before getting started. This will allow you to know when to buy stocks, and when the best time would be to sell them. It’s never too late to get started as long as you’ve identified your goals.
4. Get Comfortable with the Basics
Most importantly, you need to know what you are getting yourself into. Familiarize yourself with the basics, which includes exchange methods, different types of investment accounts, and stock market order types to name a few.
5. Minimize Risk by Diversification
Some of the most experienced investors out there all agree on this one. In order for you to minimize your risk, you need to diversify your portfolio as much as possible. Make sure you invest in a range of different stocks over a variety of markets and industries. And also consider trading stocks with a Forex broker as they are more liquid and typically you can get in and out of your position much quicker.
6. Don’t Over Leverage
Leverage is when you borrow money to finance your investment. While it can be handy when you short the cash, it can be detrimental if the market should drop drastically. If you do not have enough money to go directly to the stock exchange and purchase stocks on a non leveraged basis, you may consider opening a single stock CFD trading account with a Forex broker. Forex brokers in Europe will allow you to trade single stock CFDs on a 1:5 basis and most Australian brokers will allow you up to 100:1 leverage to trade single stock CFDs.
You’ll need to do some research before taking the plunge and investing in the stock exchange. If you are not clued up with investing in the stock market, be sure to give us a call and we’ll be able to provide you with expert guidance and investment advice.