Like everything else in life, becoming a successful trader requires a lot of time, practice and knowledge. 
Unfortunately, the path to success isn’t linear; you may fall several times and lose money before you hit your stride.
Our goal is to make your path to success as straightforward as possible by presenting the top-11 things every seasoned investor wishes they knew before they started trading. These realizations may mean the difference between success and failure.
- There are no get-rich-quick schemes
If you’re entering the market to make millions overnight, chances are very high you will end up blowing out your account. Trading securities may be a great way to earn an income, but it requires a lot of practice, patience and knowledge of the financial markets. You will not find many legitimate cases of traders turning $1,000 into $1 million. Set realistic goals and proceed accordingly.
- Investing and trading aren’t the same thing
Your ability to grasp this subtle, yet crucial difference may set the tone for your entire career in the financial markets. Investing is a long-term strategy for wealth creation. Investors buy securities they intend to hold for a long time and build diverse portfolios that protects against risks. Trading, on the other hand, involves buying and selling securities over a very short period in order to profit from price fluctuations. If you’re a trader, you probably don’t care too much about the intrinsic or fundamental value of the asset you are purchasing – you simply want to sell it for more than you bought it.
- Trading with a regulated broker
In the age of online trading, there are literally hundreds of brokers to choose from. The very first thing you might look for in a broker is that they’re regulated. It may be better not to open an account with a broker that isn’t regulated in the country or region they are headquartered in.
- Guaranteed stop-loss
Simply put, a stop-loss is an order to sell a security at a specific price in order to limit losses. A guaranteed stop-loss puts an absolute limit on how much money you can lose on a position
- Take-profit orders in trading forex
No discussion of online trading is complete without touching specifically on forex, the world’s most liquid financial market. If you decide to trade currency pairs using take-profit orders means that you specify exactly at which point you want to close your current position for a profit.
- Fixed spreads may save you money
A spread is simply the difference between the bid and the ask price of a security you intend to buy. Most of the time, spreads are floating or ‘variable’, which means they may fluctuate significantly based on supply, demand or trading activity. By using fixed spreads, the difference between the ‘bid and the ‘ask’ doesn’t fluctuate, but remains consistent. This creates a more predictable, less risky trading environment. You may consider using fixed spreads to minimise the impact of volatility and increase savings.
- Leverage is a double-edged sword
Many brokers allow traders to use borrowed capital for an investment. This is referred to as leverage, and should be used carefully when starting out. Excessive leverage may make you blow out your account very quickly and turn an otherwise profitable strategy into a loss. As you become more experienced, you may use leverage to your advantage, but it may be better not to let the lure of quick riches lead you to blunder.
- Promises of high profits are usually scams
There are many brokers, fund managers and online traders that guarantee you double-digit returns. Simply ignore these and your bank account will be happy you did. If you read the first tip, you know there are no get-rich-quick schemes, so it might be better not let anyone convince you otherwise. Be highly skeptical of anyone promising you lots of money and instead focus on building a solid investing strategy.
- You should not be discouraged when you fail
As a trader, you will surely make mistakes. You should not let mistakes or loss of funds discourage you from trading again. Instead, it may be good to constantly remind yourself of why you opened up a trading account in the first place. The more you learn, the more you earn. This is especially true in the world of trading. You may refine your strategy and press forward. If you’re following these tips, you may be safeguarded against big risks anyway.
- Excessive trading may burn a hole in your wallet
Even if you decide to become a day trader, there is a smart approach to handling high-frequency trading. Excessive trading may cost you a lot of money by way of transaction fees, which include commission fees and spreads. This is how a lot of traders lose money early on in their careers.
- Efficiency is key to success
Let’s face it, most of us are part-time traders with full-time jobs and other commitments. When choosing a broker, you may check if they give you all the bells and whistles to make your trading experience more efficient. This includes access to a common trading platform (like MetaTrader), automatic alerts, mobile trading and automatic charts upon login. This will save you a lot of time and allow you to focus on improving your overall trading strategy.
Final Considerations
We all have our reasons and motivations for becoming traders. Whether you’re looking to build wealth over the long-haul, enjoy short-term profit or eventually become a full-time trader, applying these principles may assist your trading career. While there is no foolproof method to making money in the markets, by combining what you learned above you may create a level-headed approach to trading.
Risk warning: Forward Rate Agreements, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. Our group of companies through its subsidiaries is licensed by the Cyprus Securities & Exchange Commission (Easy Forex Trading Ltd- CySEC, License Number 079/07), which has been passported in the European Union through the MiFID Directive and in Australia by ASIC (Easy Markets Pty Ltd -AFS license No. 246566).
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