Stock trading is indeed a worthwhile investment opportunity, especially if you have an analytical mind and the ability to read charts. Stock trading is highly profitable for the right trader, as the performance is dependent on the performance of the stock, market conditions, and fundamental factors, all of which can be easily analysed. Of course, it might all seem highly complicated for beginner traders, but don't worry, you too can learn to trade stocks and become a professional trader.
Of course, stock trading is risky, just like any other business opportunity. Not a single industry in the world can promise a profitable return on investment unless there is a sincere effort from the investor to be proactive in their efforts. In its pure form, the risk of stock trading is directly proportional to the stock's performance. However, derivatives trading can be riskier, owing to the instrument's nature, but the use of leverage or margin can accentuate the risks. Trading on margin can yield higher returns, but the downside risks are proportional to the gains.
There isn't a right or a wrong stock. Every listed stock is a component of the exchange and reflects the market sentiments, the company's performance, and other internal or external factors. Successful investors don't find the right stocks; they find the right opportunity. For instance, buying Apple stock at its peak can be an absolute worse investment decision for the short-term, while a new blue-chip stock with no history and impending patent-pending can be a great buy. There are bad companies or stocks that perform poorly or are overvalued, but it can be easily found out by doing the proper research before investing in them.
It is also imperative to be aware of the different derivatives and CFDs offered by FX brokers. These instruments are excellent for those who do not wish to invest a large sum of money in purchasing actual shares. It is also easier to hedge positions, enter long & short trades, and hold a larger position with leverage. Leverage can increase the risk, but it can also be used to minimise risk effectively.
Regular stock trading will require a large trading capital, but only to acquire the shares according to their nominal or market value. Sometimes, brokers may ask their traders to post a margin, especially for SWAPs, but in the case of share CFD trading, the initial capital requirement may be quite low. Many Forex brokers offer stock CFDs with high leverage, which allows traders to minimise their capital outflow while opening new positions. Therefore, it is not absolutely vital to have a higher trading capital, but in the best-case scenario, it is recommended to reduce leverage while trading larger positions.
There are numerous online courses for stock trading, including dedicated college programs and university degrees. We also provide numerous trading tips and advice through our educational materials, which can supplement your preparation. Of course, you should also read books about stock trading, as a successful trader will always look to increase their knowledge of the markets. Not all courses are expensive, but the costs may add up. Suppose you are running short of money to spend on formal education. You can always turn towards free online resources, but make sure that you correlate your learnings and findings with actual market scenarios. It is difficult to unlearn wrong information, so you should keep an open mind while dealing with the risky instruments from the global stock exchanges. If you want to see the Trading Education of William Thomas click here.
You can always try out your strategies and your knowledge by trading on a demo account. It minimises your risk, as you are dealing with a virtual trading account that does not use real money. Trading with a virtual trading capital will help you prepare for the market dynamics, but be warned, trading with real money will have its emotional components and market impacts. Trading share CFDs with a Forex broker with a smaller capital can help you grow as a trader and earn a substantial income.