5 Ways to Test the Market Waters

As a new trader, it is always a good idea to test the market waters, so to speak, or at least conduct your early trades in a conservative manner.

Today we are going to look at five different ways in which you may minimise your initial losses and aim to make your early experiences as a trader as lucrative as possible.

  1. Use Limit Orders

When you purchase stocks you will be given the option of purchasing via a market order or a limit order.

A limit order may be a good way to go because this will allow you to set the highest price you are willing to pay for a given stock, as well as the lowest price you are willing to sell at.

  1. Ignore the News

Some traders actually ignore the news because there are all manner of conflicting opinions and hyped stories being espoused by pundits around the world.

You might be surprised by just how many people will spin uninteresting stories in order to create talking points, so ignoring the news altogether may help to keep you more level-headed.

  1. Think Long Term

Once you have developed a general understanding of the types of stocks you are looking to invest into, you should begin to set your gaze with a more long-term focus.

Clearly great stocks will often be priced at a premium, which can deter investors due to the initial cost of entry. Having said that, if you choose your stocks wisely then you will find that prices may very quickly grow into profitable territory.

  1. Invest in What You Understand

If you are finding it difficult deciding which stocks to trade any, you might want to consider investing in something you already have an understanding of.

If your work or personal hobbies cover a specific subject or industry then you will probably have a far keener eye for what makes a good company and a lucrative stock option in this field.

  1. Bag Some Profits

It can be very tempting to keep hold of stocks for significantly long time if you are seeing consistent gains; however, you will never actually be able to enjoy any of your profits if you don’t eventually sell your stock at some point.

An extension of this point is the fact that even the biggest companies of all cannot remain at the top forever. Booms and busts come and go, and you never know when the currently profitable stocks you are holding may suddenly take a downturn.

Remember also that selling some of your stock and reaping the profits will free up some of your capital so that you can begin reinvesting into new ventures and new opportunities.

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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