The world of trading offers a diverse pool of opportunities to venture into. For instance, you can choose between trading Forex, stocks, options, derivatives, or even physical assets. Among these, forex and stocks are perhaps the most popular markets. Despite the market you choose, trading can be incredibly fun, especially if the numbers are to your advantage. A single trade can be executed in just a few seconds, only to make you a few thousands or millions of bucks richer.
However, the flip side of the coin is also true, meaning you could lose tons of money in a flash second if you are not strategic enough. This is why some of the most successful traders insist on always being strategic and mindful while making decisions as a trader. Especially if you are just getting started, here are some tips to help you become a smarter trader.
1. Invest Small
One thing that every experienced trader will always tell you is to never trade all your money or a large percentage of it even when the deal looks too good. Investing your fortune all at once has never been, and will never be a wise decision. While there is a chance you will make a profit, there is also a possibility you can lose all of your money. It is safer and wiser to invest little amounts of money at a time unless you are a hundred percent sure of reaping massive profits (which is next to impossible).
2. Consider Security
As a smart trader, it pays to consider your safety and security before placing your hard-earned money in an investment. Sadly, many traders have fallen victim to fraudulent deals and theft while trading in the past, so you may not be the first. For this reason, it is smarter to only use a reputable trading platform where your private information and funds security is assured. This is especially when trading cryptocurrency, which has for long been a major target of cybercriminals, scams, and online fraudsters. As depicted by the Swyftx security features, the platform you select should have multiple practices in place to ensure your account is as secure as possible. These may range from KYC verification to biometric authentication, 2FA, external penetration testing, and 3rd party security audits. Reputed crypto trading platforms also enhance trader security further using measures like:
- Cold wallet crypto storage
- Encouraging the use of antivirus/malware protection software
- Providing users with tips against scams and phishing
- Regular tutorials and resources on trading safety
3. Make Multiple Small Investments
As a trader, you’re always tempted to make an investment somewhere. This is because a trader’s attention is constantly focused on profit. However, because putting all of your money into one investment isn’t a good idea, you might consider making tiny deposits in several different assets. This is referred to as “spreading your good fortune.” While one or two of the investments may fail to yield a profit, you can count on two or three of them to do so. Instead of having the money sit in your bank account uninvested, consider making various investments to spread your risk.
4. Always Have a Plan in Play
You have the money, you have the opportunity, and your mind is clearly telling you to invest. You shouldn’t do that as a clever trader. Take your time and examine the likelihood that this opportunity will provide you with something substantial. You should create an effective trading strategy, so you know exactly what you’re going to invest in and where you’re going to invest it. The plan should consider all potential risks and identify effective risk reduction techniques. This is how a savvy trader invests: with a strategy.
5. Be Patient
Being in a rush as a trader can cost you huge losses. You might lose a great deal of money if you rush to make a deposit into an opportunity because the earnings appear promising. A wise trader will always take the time to consider a potential opportunity. This is especially for investments that offer high rewards in a short time frame. As a trader, you should value your money, and take the time to verify if an opportunity is truly worth investing in.
6. Always Invest the Surplus
Like everyone else, there’s a big chance you have personal expenses to consider, as well as a set amount that should be saved. Before trading, this money should always be kept aside. When making a risky investment, it’s always better to spend money that would otherwise be wasted. You can trade what’s left after you’ve covered all your expenses and saved your customary amount.
Finally, avoid borrowing money to trade, and try as much as possible to avoid panic trading. Your trading prowess can either grow your financial muscle or destroy you financially. The former is more common amongst smarter traders. Thankfully, the few tips above can help you make wiser decisions as a trader in stocks, forex, crypto, or bonds.