Want to Trade Your Way to Riches? Here Are Questions You Must Ask Yourself
More and more people are getting in trading these days. But before you join the crowd, you need to ask yourself some important questions.
What’s your current relationship with money?
If you don’t know much about your current financial situation, then you might be setting yourself up for failure. You should take the time to review your current outlook when it comes to money. Do you care a lot about money? Or is it one of the lesser worries in your life? Do you believe money should only come from hard, gruelling work? Your monetary belief system will affect your choices in ways that may surprise you.
How much do you know about the economy?
Do you know what makes the value of a particular asset rise or fall? Do you know what kind of trader behavior has caused massive financial crashes in the past? Do you know if a particular company is running in the black or the red? (Or what that even means?) You need to have a good grasp of economics and finance in order to make it here.
Do you know how to trade?
A lot of people underestimate the game of trading. In fact, I probably shouldn’t even use the word game here. Many seem to think that’s actually what it is. But trading is much more intricate than you may believe. It’s not just a case of pressing the right buttons when numbers are looking green or red. Of course, by trading, you’ll learn how it works. But you’re better off using something like a forex demo to train yourself first, free of risk.
Are you willing to risk it all?
Okay, so risk it all might be an overly dramatic phrase. I doubt you’re going into this with ideas of investing all you have into this pursuit. But you do need to figure out exactly how much you’re willing to risk now and in the future. This is called working out your risk tolerance. You might be able to take more risk than you thought.
How long do you want to do this for?
Are you looking for something to pass the time for a few months? Are you hoping to spend the good part of a year or two on this? Do you need to make money immediately? Or are you willing to leave it for a few years for a payload in the future? Maybe you’re even patient enough to invest now and leave it for a decade or even two. The amount of time you have, or are willing to wait, will determine what exactly you should invest in.
Are you ready to do your research?
Every time you buy and sell – whether it be stocks or currency – you need to do your research. You need to be able to state specifically why you want to make a particular trade. What makes you think that a share or a particular currency in going to increase in value? Don’t rush into any decision just because the immediate numbers look good. Read up on a company’s history and plans, or the financial status of the country from which the currency originates.