finance
monthly
Personal Finance. Money. Investing.
Contribute
Newsletter
Corporate

Mark Lyttleton is an experienced angel investor, speaker and business mentor who specialises in providing early-stage businesses with the support they need to grow and scale. This article will provide pointers on investing in the stock market for novice investors, exploring the different options and considerations for a sound investment strategy.

Investing in stocks involves purchasing shares in publicly owned companies. If the company performs well or is taken over, these shares may rise in value, enabling the investor to earn a profit should they decide to sell. An individual investing in stocks is essentially hoping that the company will grow in value over time. A popular way for novice investors to become involved in the stock market is by placing money in an online investment account. This money is then used to purchase shares in public companies or stock market mutual funds.

Many brokerage accounts enable customers to start investing for the price of a single share. Some brokers also allow and encourage users to start by paper trading, enabling them to use stock market simulators and practice buying and selling stock without risking any real money.

For those keen to start investing in the stock market, the first consideration is how hands-on they want to be with their investments. They then need to set an investing budget, open an account, choose their investment strategy and focus on the long-term, managing their portfolio as necessary. It is good practice to build a diversified portfolio, enabling the investor to stay invested in the long term. Diversification reduces the risk of the investor panic selling should a particular stock or market see a sudden dip, as they have spread their portfolio across different companies and industrial sectors.

All investors start trading to grow their money over time. Yield can be an important component of the overall return and can vary significantly from one investment vehicle to another. Although rates on bank savings accounts have seen some upward momentum recently, this is still below the current level of inflation. Because of this, many investors are turning to the stock markets. However, investing in stocks always incurs an element of risk, since investments can go down in value as well as up.

Take for example the S&P 500, an index made up of 500 of the largest American companies. Since it started in 1957, it has produced an impressive average annual return of 10.7%. Nevertheless, looking more closely, as well as seeing sharp spikes, the S&P 500 has also taken some terrific tumbles – such as during the financial crisis of 2008, returning -43% in the 12 months ending February 2009.

A key consideration in devising an investment strategy is risk tolerance. Stocks are categorised in various ways, for example, value stocks, aggressive growth stocks, small-cap stocks and large capitalisation stocks. Each has its risk level. Once the investor assesses their risk tolerance, they can set their sights on stocks that are compatible with their risk appetite.

Crypto diagram with green and red candlesticks on blue display. TradingView.

Another important consideration is the investor’s stock trading goals. Someone just beginning their trading career may simply seek to increase the money in their account. Alternatively, they may be saving for a deposit for a house, to pay off student debt or to fund their retirement. An investor’s goals will evolve, so it is important to review them periodically to ensure investment choices align with their current objectives.

In terms of investment approaches, these can vary considerably from one investor to the next. Some investors prefer a hands-on investment style, while others are happy with an automated, or passive, approach. An investor who is confident in their investing knowledge and capabilities may choose to build and manage their investment portfolio on their own via traditional online brokers, investing in a combination of stocks, index funds, mutual funds, bonds and exchange-traded funds.

For a novice investor with little or no trading knowledge, enlisting the help of an experienced financial advisor or broker would be prudent, helping them to make investment choices, monitor their portfolio and make changes as necessary. Another option that is growing is a robo-advisor, presenting an automated, hands-off approach that is typically more economical than working with a financial advisor or broker. Once the investor has outlined their risk tolerance, investment goals and other details, the robo-advisor can automatically start investing for them.

Another way of investing is by opening a pension or retirement account, with many presenting the opportunity to invest in stocks. These may include stock mutual funds, exchange-traded stocks or individual stocks and often have the additional benefit of tax breaks, although usually with some restrictions as well.

Diversification is a critical consideration for investors and an important concept to understand. When an investor spreads their portfolio across a range of different assets, they reduce the risk of one investment’s poor performance jeopardising their entire investment. Essentially, diversification involves the investor not putting all of their eggs in one basket, instead spreading their investments across various companies, markets and asset classes.

For many people, investing in the stock market is an effective means of building wealth, Nevertheless, it is important to understand that stock value can also decline, leaving the investor at risk of losing some or potentially all of their investment capital should a market dip or company go bankrupt.

 

What Are The Fundamental Steps To Pursue To Conquer The Trade Market?

The first step to having the right attitude when investing in the stock market is to adopt a long-term perspective. Investing in the stock market involves taking risks, and you need to be willing to take risks that are reasonable and based on your research and analysis. You also need to be aware of the risks you’re taking and have a plan in place to manage them.

You should also be aware of the different types of investments and sectors, so you can build a portfolio that is best suited to your needs. You need to stay informed. The stock market is constantly changing, and you need to stay up to date on the news and events that are affecting the markets. You should also be aware of the different strategies and techniques you can use to maximize returns and minimize risks.

Success in the stock market requires discipline, patience, and focus. You should also have an open mind and be willing to learn from your mistakes and adapt your strategy as needed. Each investor must research and adapt the strategy that suits them best.

The Good & Bad Of The Trade Market

The trade market is a volatile and ever-changing landscape, with its ups and downs providing both opportunities and challenges for traders. As with any area of the financial markets, the trade market is subject to frequent fluctuations that can have a significant impact on the performance of individual traders and even the entire market.

When the trade market is up, it can be an exciting and potentially lucrative time for traders. With the potential for profits, traders are eager to jump in and take advantage of favourable conditions. When the market is up, traders may be able to make quick and easy profits from short-term trades.

On the other hand, when the market is down, it can be a difficult environment for traders. In addition, when the market is down, it may be difficult to find profitable opportunities. This can be especially discouraging for those looking to make a long-term investment.

In addition to the ups and downs of the market, traders must also contend with the uncertainty of the future. It is impossible to predict how the market will behave in the days and weeks ahead, and this can be a source of frustration for traders. As a result, traders must stay informed and adapt their strategies as necessary to ensure they are prepared for whatever may come. Read more to know about the trade market analysation.

Final Words

The stock market is an unpredictable arena, but with the right attitude and approach, you can increase your chances of success and make winning in the stock market a reality. By adopting a long-term perspective, taking calculated risks, diversifying your portfolio, staying informed, and having the right mindset, you can make success in the stock market in 2023 a reality.

Overall, the trade market is an ever-changing and unpredictable environment. With its ups and downs, it can be a great opportunity for traders to make profits, but it is important to remember that the potential for losses is always present. As a result, traders must be prepared to adapt their strategies as necessary and stay informed to maximize their chances for success.

Despite the multi-financial products being traded, the basic mantra of trading remains the same – buy at dips and sell at highs. The tricky part is to judge whether it’s the right level of dip to enter the position or wait further. Similarly, there are apprehensions when prices appreciate, and you dawdle whether to square off or wait further. For long-term investors, knowing when to buy, hold and sell are crucial decisions and should be taken with caution, as inappropriate timings can dilute the returns expected from long-term investments. 

What can you look for before a buy or sell decision on Stocks?

Your risk tolerance and investment objective are the primary factors that determine whether you should buy, sell, or hold an investment. There are other factors that you need to consider holding stocks. A Demat account allows you to hold shares for as many years as you want. You just need to pay Demat account charges.

Let us explore this subject further and understand how to decide whether to buy, sell or hold a stock.

Growth of Revenue: You need to examine a Company's revenue, not only on yearly basis but also quarterly. You can buy and hold the stock if quarterly sales show an upward trend. You can consider selling the stock if the Company's earnings have been lower than expected in subsequent quarterly results.

Dividends: A stock that distributes dividends to its shareholders consistently is considered a good buy. When you open your Demat account they may provide you with research reports. It can be a relevant source to find fundamentally strong stocks offering dividends consistently. You can buy such stocks and hold on to them for a regular dividend payout.

Margins: A Company's margins may increase, or decrease based on how well it is being managed. If the income is increasing, but expenses are also increasing faster, it means the Company is taking new initiatives to grow its revenue. It might be launching a new product or expanding its business operations. It can be a favourable sign to hold on to such stocks.  

Market Share: Market share means the percent of total sales in a sector generated by a company. There is nothing wrong with selling the stock if the Company loses market share to competitors.

Valuation: There are different ways to determine a stock value. The most common measure is a price-earnings ratio (or P/E). The lower P/E ratio means undervalued stocks. Investors can compare the Company's P/E to its peers in the industry. If a stock is undervalued, it is considered a good buy.

Disciplined long-term investing: As a long-term investor, you need to avoid panic over short-term movements. If the Company, you have invested in is fundamentally strong, you should continue to hold its shares despite the short-term volatilities. 

When to Sell Stocks

A Stock Hits the Price Target: A trader can sell a particular stock they hold when its price has appreciated and reached close to the target price. You can decide on a specific percent appreciation in stock price, after which you will exit the position. If you have blue chip stocks and it approaches your desired target price, you can book profits and buy them later at a lower price. If it is a penny stock, it can be a favourable opportunity to book profits because it is unlikely to sustain the hiked price for an extended period. The sudden increase can be due to speculation with an impact on headlines. 

Adjusting a Portfolio: One of the common reasons to sell stocks is to rebalance a portfolio according to your financial goals, risk tolerance, and investment time horizon.

Meeting Set Goals: You can sell your stocks if you have achieved your financial objectives. You can place a limit order to sell your stocks at your price or better. A Good-Till-Triggered (GTT) order type can help you place such orders. The stocks will automatically get sold when it reaches your set target price. 

Opportunity Cost: Investors consider selling a stock if they find other opportunities to earn a greater return. If you hold an underperforming stock, it may be time to sell it to free up the capital to make alternative investments. 

Prepare a strategy for buying, holding, or selling a stock that factors in your risk tolerance and time horizon. Also, consider various factors involved in stock investment-related decisions. You can keep a watch on its business performance and consider selling the stocks in case of a major change in the management or the business model that might adversely impact the business.

Investment in the securities market is subject to market risk; read all related documents carefully before investing.

 

Inflation. It is in the headlines, your local shop, your costa coffee, your work lunch, your energy bills, your date nights - it is making financial life for most people pretty miserable, and with the highest rise in the cost of living for 40 years, it is understandable. But if you cannot beat them, join them, thus, I am on the lookout for investment options for my portfolio that can benefit from the rising prices.

The financial markets are in turmoil currently, partly as a result of the challenging economic conditions, so my ISA value relative to this time last year is not a welcome sight. 

Why investors are worried

With inflation expected to continue rising, income investors like me are worried. Particularly as the FTSE 100’s yield is only 3.73% currently. To put this into context, the maximum dividend yield of the FTSE 100 index over the last 20 years was back in 2020. At one point during that year, it was at 7%, which would have at least been commensurate with the current level of inflation investors are faced with today.

Consumer price rises, currently at 9% compared to the same point last year, are expected to trend even higher this year. So, with persistent price rises looking like the medium-term norm, where can I turn to find investments that may provide an inflation-protected income, or growth, in the meantime?

Three places to consider investing

I would not normally invest in single stocks. But considering my portfolio is well-diversified, across assets, sectors and regions, mainly through a range of open-ended funds and investment trusts, a tactical move is justified considering the current market challenges. 

Imperial Brands (LSE:IMB) is a good place to start. Tobacco stocks are cheap, and the British cigarette maker is one of the cheapest. The stock trades around 6.8 times projected 2022 earnings, significantly lower than the sector average of 11.4 times. It is also one of the highest yielding income stocks in the FTSE 100 currently, at 9%. 

Alternatively, Phoenix Group (LSE:PHNX) is a stock with a yield in line with inflation, with additional growth potential. Its shares are now yielding over 8%. As interest rates rise, an insurance company’s liabilities (in the form of life policies) decline. In addition to this, the company is now writing more new business than the decline in its legacy business, so it is likely that the current dividend has the potential to grow from here.

These are two relatively high-income-producing stocks, which perform as well, or if not, better, in a high-inflation environment. As an income-focused investor, I ideally need returns yielding real returns above inflation. These stocks have the potential to provide this for me in the medium to long term. 

Finally, core infrastructure stocks are another option that offers better inflation protection qualities than the wider stock market. Research and index providers, LPX AG, ran the numbers to prove this (up until May 2022). Core infrastructure stocks, as measured by the NMX Infrastructure Composite, have returned  9.9% per year since 1999. Seven percentage points more than the average inflation rate. It dwarfs the performance of the MSCI (6.6% per annum). The data shows that these stocks (as measured by the index) perform even better when inflation edges higher. For example, when the average inflation rate is above three per cent, the average excess return of infrastructure stocks over the MSCI World is 8.1 percentage points. 

Final thoughts

There are no guarantees here, but these are the types of businesses and assets that seem more capable of defending against the effects of inflation than others. This is a key reason why I intend on buying these shares. Of course, all this is assuming that inflation will remain a problem and interest rates are going to rise on a sustained basis. Those are both possibilities but not certainties. 

Nevertheless, I am dependent on my portfolio income and believe inflation will continue to persist. This requires me to seek out undervalued stocks to add to my portfolio that still has the ability to pay out growing income despite the volatile market environment.

If the current climate persists, assets that yield real returns (an investment return above inflation) will be vital to me maintaining my income and capital growth objectives. 

About the author: Henry Adefope is an Associate Director at global communications and advocacy firm, SEC Newgate UK, and an investment commentator. He directs communication activities for major investment brands across a host of strategies and asset classes. Clients have included Vanguard, State Street Global Advisors, BNP Paribas, Barings, and RBC Global Asset Management. He began his career at Goldman Sachs and Broadwalk Asset Management and is a Chartered MCSI member of the Chartered Institute for Securities & Investments, as well as a member of the CFA Society. 

Disclaimer: This article does not constitute financial advice. All investments are made at the reader’s own risk.

Most financial advisors tell their customers the best thing they can do to grow their wealth after getting rid of debt and preparing for the future is to invest. Of course, there are various ways to grow your money through investing, and countless vehicles to use for your trading strategy. Finding the right solution for you can take some significant time and investigation.

For the majority of people, the most common areas to explore will be either share and stock trading, or forex trading. With shares and stocks, you pay for portions of a company, which you can trade or sell at a later stage. With forex, or FX, you’re making money by buying foreign currency and exchanging it from one currency to another. Let’s explore whether FX could be right for you.

What is Forex Trading?

FX or foreign exchange trading is one of the most actively traded environments in the world. Companies, banks, and individuals alike all carry out huge transactions on a regular basis. While much of the foreign exchange that happens every day is done for practical reasons, most currency conversion occurs as a result of forex trading. The amount of currency big investors choose to convert in a day can even lead to price movements for some currencies, making the market more volatile. Although FX might seem quite complicated, it’s much simpler than you’d think. The process starts with choosing a pair, or two types of currency that you can trade against each other, like EUR/USD.

Unlike other forms of investment, forex is usually quite fast-paced, as it requires users to act on slight changes in the value of a currency to make the biggest profits. You’re constantly working finding the most valuable lots for your portfolio. For beginners, it can be a little tricky to get started, which is why it’s so valuable to read guides that explains the considerations involved when investing in foreign currency in Australia when first getting started.

Is FX Trading Profitable?

For those looking to grow their wealth, the right forex trading strategy can be extremely beneficial. There are plenty of people out there who have made money by trading regularly in the foreign exchange market – but not everyone is suited to this task. If you’re looking for a more long-term solution where you can invest in something and leave your money to grow over time, this probably isn’t the environment for you.

Forex is all about speed and timing. You need to ensure you’re acting as quickly as possible when little changes happen in the market, or you could risk losing a lot of cash. However, if you have the time and skills to focus a decent amount of attention on this type of trading, it could be a powerful tool. As with most forms of wealth building, it will be up to you to determine how much risk you can take on as a trader, and whether the forex environment is a good place for you to begin exploring. There are always plenty of other options if you decide forex is too confusing.

In this article, you might learn about the steps of increasing the success rate. We hope it will help you to go a long path to fulfilling your dream. 

Learn to cope up

New traders face issues adjusting to the new situation. They can’t think properly. They become puzzled. For this reason, they face issues. Sometimes, if the traders can learn to cope up, they may get better results. Because they might understand how to apply the techniques to make money. So, they need to gain the knowledge which might aid them to get the success. However, do not try to take any action in an aggressive way. So, be aware of this.

Be self-restraint 

If you become self-restrained, you might not face any issues. You may get a better opportunity which might help you to make more money. So, being a trader, you need to increase your patience level. Otherwise, you might face problems. So, try to keep the discipline which might help you to get success. Always remember, if you can increase the discipline level, you might also increase your patience level. So, try to become self-restrained. Do not try to do work in a hurry. Try to become calm so that you can make the right decision. If possible, look at this site and learn more about the conservative trading technique. Once you do that, you will no longer feel the urge to trade with aggression.

Make some logical changes

Sometimes, depending on the situation, traders need to make some changes. Because, if they can make the right plan at the right time, they may make money. But, most of the time, traders face problems as they are not aware of the different characteristics of the market. Sometimes, traders can’t check their plans after making the changes. But, if they can check the plan, they might be able to play the plan properly. So, they should try to make practical changes.

Keep practising

You need to do practice properly. Always remember, you can use a demo account for free. For this, you don’t need to invest a single money. So, try to improve yourself through regular practice. If you can do regular practice, you might not face any hassle. So, learn to do your task properly. However, sometimes, traders face issues because they are not properly prepared. They think they can instantly make the decision. They should try to practice more and more. However, traders must open a demo account to justify themselves. 

Be courageous in a tough situation

Newbies need to become courageous as they have to overcome the barriers. Moreover, if the traders can grab the big challenges, they may reach their target. Moreover, traders must be prepared to increase their courage level. If they know what to do, it might be possible to make money. So, traders need to concentrate on developing their performance. For this, they need to keep the record. If they can review the record correctly, they might make profits. Because they’ll become aware of their mistakes and thus they can decide the right action.

In the Forex market, these tips will help to stay in the field for a long time. Traders should follow these properly. If they apply these properly, they may reach their goal. So, they should always run their business systematically. If they can do so, they may get a better result.

 In this article, we’re going to take a close look at the rise of Canadian trading apps and see how they can help you grow your portfolio and free yourself from wage tyranny.

Paychecks? 

I’ll let you in on a life-changing secret, the kind that they never teach you at school. No matter what job you get (with very few exceptions), you will never get rich whilst working for a paycheck. No never. Seriously, I know high profile corporate lawyers who were quickly left ruined and living in basements after a nasty divorce or simply after losing a lucrative job. If you really want to get out of the rat race, be comfortable and never worry about paying the gas bill again, then you absolutely need to diversify your income streams.

The more sources of money you have coming in, the safer you are. Without a doubt, the best way to do this is by trading stocks and shares. But it all sounds a bit complicated, right? It can be, but thanks to technological innovations and a whole plethora of cutting edge trading apps, it's getting easier than ever.

Buy! Buy! Sell! Sell!

When most of us visualise the stock market, we think of frenzied trading floors, giant screens showing who is up and who is down, ringing telephones and cries of “buy, buy! Sell! Sell!”.  If it sounds stressful, it's because it is. Corporate burnout in the Wall Street stock exchange is at pandemic levels. But it does not need to be like this. Remember that the whole point of the stock market is that it is open to everybody including you. Whether you are Warren Buffet looking to invest $10 million of loose change, or a humble bartender looking for someplace to invest $100 in tips, you can now get a piece of the stock market from the comfort of your own pocket.

Stock Trading Apps

Stock Trading Apps are smart/iPhone apps that allow you to watch, monitor, study and take part in the Stock Trade market in real-time. You simply install the app on your phone, set up your account, fund it, and off you go. You can buy and sell stocks and shares, you can trade and you can cash out at any time you like.

The rise in Stock Trading Mobile apps has been both meteoric and absolutely inevitable. The appeal of a stock trading phone app is obvious. Whereas once upon a time you needed a desk, multiple computer screens, a set of braces and possibly a casual cocaine habit to get on the stock market, now all you need is a phone - the stock market is now accessible for everybody. This means participants can trade in an environment, and in a way in which they feel comfortable. Best of all, they can do it in their spare time whether that's sitting on the train home from work, waiting for a coffee, or sneaking a quick toilet break (imagine coming back from the bathroom $100k richer than when you went in eh?).

A lot of apps have also aimed themselves as user friendly such as allowing “practice runs”  where basically you can play the real stock market using “monopoly” money until you get a feel for it. Other investment apps like e-Toro, allows you to simply “mimic” top traders - if they make a trade, so do you (albeit with a smaller amount) so you don’t have to do any of the hard work or thinking yourself.

But what are the implications of this?

Well, the opening up of the stock market to the masses has caused some notable consequences. Some commentators have even suggested that the 2020 Wall Market bubble that seemed to ignore the financial crisis caused by the COVID pandemic, was partially a result of furloughed workers sitting at home spending their time and money investing in the stock market! Cynics (and dare I say snobs) have even alleged that these “amateur” participants are dangerously meddling in the sanctity of the market.

A high profile consequence was the Gamestop debacle which made global headlines. To recall, a Reddit based community of DIY stock app aficionados using the Robinhood Trading App collectively decided to invest in the (previously underperforming) Gamestop Company sending the share price skyrocketing in a bubble that was sure to burst. This prompted the Wall Street regulator to step in and sanction the Robinhood platform on the grounds that it had facilitated market manipulation and forced Robinhood to apologise and revisit its business model. Of course, the counterargument is that this kind of “manipulation” is exactly what professional Wall Street traders have been doing every day for the last 100 years with no reprimand.

Apps like Robinhood, have also seriously dented the earnings of Stock Brokers and Financial Advisors as more and more of their clients realise that they no longer need to pay a middleman. This is serious business. According to the Financial Times, retail trading including mobile trading (that's ordinary folk with extraordinary phones) now accounts for as much stock market trading as mutual funds and hedge funds combined.

Regulatory Realities

In theory, the internet exists outside of geography and cyberspace knows no borders. But in practice, financial markets around the world are tightly regulated. Every platform has to be registered in somebody's jurisdiction and abide by their market rules and every user, (wherever they are based) is also subject to the financial regulations of whichever country their bank account or credit is registered in. For this reason, DIY investors in Iran will find they are locked out of trading apps as their country is totally and completely financially blacklisted. On the other hand, citizens of the US, the EU and the UK will find that their financial services friendly governments have made it insanely easy for them to get involved with few questions asked. As long as you can prove how you are funding your account, and personally undertake to declare any earnings for tax purposes, you can get trading on investing apps in minutes. Whilst the Canadian financial services authority is not quite as open as those in the UK and the US, they are still liberal enough to allow pretty much anybody to get involved with minimal hassle.

The Best Trading Apps In Canada

Canada Flag

As promised, we are going to take a quick look at some of the best trading apps in Canada.

 Wealthsimple Trade

Wealtsimple trade has proven itself as Canada’s favourite trading app. You can open an account with $0 (though you will need to fund it to trade) and they charge a $0 commission on trades. Typically users can expect to save $9.99 per trade compared to brokerages and the app interface is quite easy to use once you have gotten to grips with it.

Questrade

Questrade bills itself as being for the “experienced and the beginner alike” but the $1000 minimum deposit says otherwise. Still, their commissions range from $4.99 - $9.99 so they are competitive and they do offer a range to a whole load of corporate stocks.

Qtrade

Qtrade is popular with credit unions. They are not quite as established as Wealthsimpe and their fees are a bit higher. They also sting you with a $25 quarterly “maintenance” fee (i.e. account rent) which is a big deal for small, dime and nickel traders. So why use them? Well, their customer support is excellent.

Investment Advisor

The stock market operates just like any other industry. This means there are buyers and sellers, competition, investment opportunities, and the like. So, these markets need both traders and investors to be accurate in making decisions for there to be profits in their way. It implies that consultations are much pivotal in the overall progress. This opens doors for investment advisors as their input will help the investors and traders superb in purchasing and sales.

Being an investment consultant in the stock market will make you ever busy as many clients will come your way. Despite the high demand for your services, you still need to sharpen your craft hence become more competitive. Consider having the correct documents, such as licenses.

This accreditation will solidify the confidence of many in you. There are different Financial Industry Regulatory Authority (FINRA) licenses for the different career paths. A review of FINRA licenses online can help you decide which one fits your career as an investment advisor. Strive to make your profile captivating.

Investment Analyst

The stock market offers opportunities for anyone wishing to specialise more in specific fields. One of them is being an investment analyst. Hard-earned money requires an investor to make the best decision on the investment idea. Thus, there will be accurate timing and connection with the right people. Successful stock investors understand this more than anybody else. Being an investment analyst allows you to study investment ideas and already to work investments. It’s through the evaluation that you confirm whether the investment has good prospects. It becomes easy to advise on the proper adjustments to make though an advisor hugely does this role with your knowledge.

Analysis of financial statements and dividends valuation models will be part of your daily work. You’ll also need to do common stocks valuations using different ratios, such as the P/E ratio.

Stockbroker

A stockbroker is an essential person in the stock market. It’s through the brokerage that buyers and sellers meet more coherently. As a broker, you’ll act as the connector between the traders and investors. Your wide connection is of many benefits to your clients as it makes you swift in linking, making the sales and purchases happen. This job needs a person who is well-updated with the market fluctuations.

Since the stocks go through different stages in the market, you ought to analyse the patterns well. It makes you much more resourceful when helping your clients through guidance on buying and selling the stocks. It allows your stock trading company to generate profitable revenue.

Acquiring the proper training is vital; hence enrol in programmes to sharpen your skills and knowledge. These days, there are online courses that are specific for anyone in the stock markets. Through the learning, you get the know-how and a certificate to add to your profile.

Stock markets are ever-changing due to the high volatility of the stocks. Starting a career in the field is promising, especially if you follow the right path. There are different career opportunities to consider, such as being a stockbroker, investment analysis, or advisor. Due to the high competency levels, it’s crucial to add value to your profile. This is where undertaking some part-time courses is fundamental.

Act in haste, repent in leisure.

Newcomers to trading forex and other assets could do well getting that tattooed about their person, such is its importance to long-term profitability. Indeed, it’s a lesson that some experienced investors also need to remember from time to time.

Those six words highlight the importance of removing emotions from your trading, of how sometimes we can eat into our bottom line by opening and closing positions at the wrong times – maybe because we’ve suffered a succession of ‘losing’ trades or because we’ve closed a trade and then watched the asset increase in value thereafter.

Having the right mindset is arguably the most important weapon a trader owns, and if you find yourself acting in haste when trading, then this article is for you.

We want to explore techniques that will help you to eliminate ‘emotionality’ from your game, from taking a breath to using automated software and Tickmill trading accounts, which will help you to retain your discipline.

Get your head right and, hopefully, profit will follow.

 

Accept defeat

There will be losing days, weeks and possibly even months.

This is one of the universal truths of trading, and yet so many still utterly fail to grasp the basic concept that not every trade you execute will be paved with gold.

The implication is that, as the hands of time tick away, there is so very often the temptation to chase losses and try to turn a losing spell into a profitable one.

And so we start opening positions that we normally wouldn’t, or closing trades to lock in a return, when, actually, the indicators might be suggesting that holding for longer is the smart play.

If we could somehow divorce ourselves from our minds, we wouldn’t fall into such traps, and it perhaps explains why the most successful traders often use software to automate their actions.

Why? Because the mechanical approach takes the human element out of your trading game, and automation also enables you to use tools – such as stop loss and take profit – that actually take the emotion out of the equation.

 

The mindful approach

If trading becomes the only thing that you are thinking about, it won’t be long before you start mentally chasing your own tail.

If you are seeking a secondary income stream from your investing, then it’s only human nature to become preoccupied with thoughts of, ‘can I make more money?’ Such a mindset will almost inevitably lead to increased activity in the market, and for reasons already explored, this usually leads to bad trades.

Try to take time away from trading. It can be exciting in the early going, but in the long term you will benefit from refreshing your mind and body by not chaining yourself to your laptop/tablet/phone.

Taking regular breaks will enable you to replenish your thinking, taking some time to consider the assets you want to trade, and whether now is the right time to enter the market. Walking is scientifically proven to improve your brainpower – so why wouldn’t you take a stroll?

Alternatives include other forms of exercise, listening to music, cooking a nice meal, spending time with friends and family, and so on. Anything that gets the endorphins rushing is a good idea.

 

Know your limits

Some people are target driven – it helps them to have a clear goal in mind to avoid uncluttered thinking. This can actually be really beneficial to traders, who can set a profit target and stick to it.

However, just as important is setting loss limits, which are a pre-defined amount in a trading session that makes you go ‘okay, enough is enough’ before walking away from the action.

Of course, the stop-loss tool available in many software packages is exactly as above, but there are many traders who prefer hands-on, manual activity – in which case, setting your own loss limit is sensible. You can even write it down on a Post-it note and stick it to your device so that there’s no way that you might ‘accidentally forget’ when things are going well/badly.

 

No FOMO

Trading has a wonderful community of newbies, amateurs and professional investors who all do their bit to cheer each other along and aid improvement.

However, that brings with it challenges – especially when your fellow investors speak of their trading wins and profits.

So, learn to switch off forums, messaging services and groups during your trading and immediately afterwards – there’s nothing like a bout of FOMO to lead you into bad moods and bad decisions.

Image by Andrew Neel from Pexels

On Monday, the trading platform revealed the details of its initial public offering in a stock market filing, preparing investors for one of the most highly anticipated IPOs of the year. The flotation follows a huge increase in young people signing up to the platform and beginning to trade shares throughout the covid-19 pandemic. The shares are expected to be priced at $38 to $42, the platform has said. 

Robinhood, which claims its mission is to “democratise” investing, is a highly controversial platform. It was recently criticised for curbing trading in the middle of the surge in GameStop shares as it struggled to keep up with demand, and, in February, the company was sued following the suicide of a 20-year-old trader. 

If Robinhood achieves its $35 billion valuation target, then the IPO will mark a threefold increase since September 2020 when the platform was valued at $11.7 billion. The company is estimated to have 22.5 million funded accounts, up from 18 million in the first quarter of this year, and expects to see second-quarter revenue for the year sit between $546 million and $574 million. This would be a 129% increase from the same period last year.

If you’ve ever spent any time betting on sports before, you may well have come across a few different ways to wager your wad. Have you ever considered betting on the FTSE 100, however?

Spread betting is enormously popular. However, there are quite a few myths and mistruths about the betting standard that are worthy of attention.

In the long run, it’s a really good idea to look into UK spread betting brokers. However, in this guide, we’ll start by looking at the basics and your profit potential.

What is spread betting?

Spread betting works similarly to sports betting. That is, in the sense that you place a wager with a bookmaker on whether or not a specific index is going to increase or decrease in value. Effectively, it’s a form of trading that appeals to casual market enthusiasts. That’s because, as a system, it is relatively simple compared to deeper trading strategies.

Spread betting can also be appealing in the sense that you won’t have to pay any CG tax on profits. What’s more, the markets are absolutely huge! You can choose to bet on a variety of shares and indexes, and there is a plethora of software out there to help you manage your portfolios.

But the killer question, again, is – can spread betting actually be profitable?

When spread betting is profitable

As with most market trading concerns, spread betting can sometimes be hard to predict. That’s largely where the idea of ‘betting’ comes into play. You’re taking a chance.

However, many trading experts – those with experience in spread betting – will likely advise you need to set up long-term plans for spread betting to actually work well. You need to be exceptionally careful in the brokers you choose, as well as to look at betting (in this sense) much like you are running your own firm.

Spread betting can be profitable if you are willing to put in time and effort. Of course, risk does pay off, but much like betting on football or horse racing, checking out form and ‘runner’ history also pays well.

Therefore, you can only really expect to make money from spread betting if you plan well in advance. It’s certainly tempting to take a punt every now and again, but when you’re muddling in the markets, you’re going to need to take a little more caution.

Is spread betting right for you?

That really depends on your own style of investing and betting. It’s not always as straightforward to say that someone who enjoys betting on racing or football will necessarily get on well with the markets.

The best thing to do, therefore, is to look closely at your profit potential and to dig deep into how the markets work. That way, you could turn your hard work and research into a serious side hustle for years to come.

The market is a highly unpredictable place. Since trading has been incorporated and improved through the years, now, it's not just buying, selling, or exchange. Additionally, studies and developments were made to help traders, like the trade simulation system. But if there are tools to help traders, there are also traps to look out for. One of them is the bear trap.

What Is Bear Trap in Trading?

A bear trap is a condition in the market where the expected downward movement of prices suddenly reverses up. When prices in an uptrend abruptly drop, a bear trap follows. This phenomenon and market performance lure many traders in investing and buying in the market.

Most traders commonly don’t know how to trade bear traps or when they're falling into the trap. A bear trap trading happens when a trader, upon getting attracted to the falling prices, decides to put on a short position when a currency pair is falling, only for the price to reverse and suddenly goes up and moves higher.

How Does It Work?

Usually, other traders set bear traps where they sell assets until other traders are convinced that the upward trend has ended and the prices will drop. As the prices continue to drop, traders will be fooled into believing that it will continue.

And then the bear trap will be released as the market turns around and prices go higher. It’s a false market performance that leads to many traders losing money.

Bear Trap vs. Bull Trap

A bear trap and a bull trap are commonly interchanged or misinterpreted. In the market, these two are opposites. If a bearish trap happens when prices are dropping, bullish traps happen when the market rises and prices continue to move upwards.

Causes of Bear Traps

There are many reasons why bear traps happen or occur in the market. They can occur in any market and commonly happen because bears decide to drop or pull the prices down.

Additionally, the causes of bear traps include:

How to Identify a Bear Trap

A bear trap can cause any trader a significant amount of losses. To minimize this kind of risk when trading, it's for the best that you know what to look out for before you get caught in the trap. Some more technical indicators you should watch out for are:

1.     Divergence

Certain indicators provide divergence signals. When there's divergence, there is a bear trap. To look out for divergence, you have to check if the indicator and the price in the market are moving in different or opposite directions. Using this to determine whether a bear trap will occur, when the price and indicator are moving in the same direction, there's no divergence so that no bear trap will happen.

2.     Market Volume

The market volume is a critical indicator of a bear trap. There is a significant change in the market volume when a price is potentially rising or dropping. However, if there is no significant increase in volume when a price drops, it is most likely a trap. Low volumes commonly represent a bear trap since bears can’t consistently pull the price down.

3.     Fibonacci Level

Fibonacci levels indicate reversals of prices in the market since trend reversals are identified using fibo ratios. This also makes them a great indicator of bear traps. A bear trap is most likely to occur when the trend or price doesn’t break any Fibonacci level.

How To Avoid Bear Traps

Bear traps are risky, and the best way to not fall into any is to avoid them. If you get caught in a bear trap, you can quickly lose money. Here are some ways to help you avoid getting caught in a bear trap:

Bear trap trading is usually utilized for short-selling or shorting by traders. But still, it’s clear that bear traps are risky and best be avoided. You’ll lose more than you can earn. When trading, it’s essential that you know what bear traps are and what indicates a bear trap so that you can avoid getting caught in one. Be patient when trading and don’t get carried away by the price drop in the market.

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram