“In this world, nothing can be said to be certain, except death and taxes.”– Benjamin Franklin
Are you interested in earning an income by investing on one of the global financial markets? If so, do you have questions around the all-important topic of risk and your exposure to risk, especially in the current socio-economic climate. You might be keen to grow your hard-earned savings by embarking on a financial market trading journey; however, you are right be worried about reducing rather than increasing your initial investment.
I believe that all of your concerns are valid, and they should be thoroughly investigated before you start trading on the global financial markets. However, I also believe that it is possible to trade successfully while protecting your initial investment. There will always be a level of risk involved; however, you will be able to mitigate your risk levels by choosing a conservative trading strategy. If there is a trick to successful financial market trading, it is to make wise investment decisions in the face of tough economic and market conditions. In this way, you will mitigate your exposure to risk while preventing large financial losses.
What is financial market trading?
Before we have a look at how to grow your wealth as well as safeguard your initial investment, let’s have a look at a formal definition of what financial market trading is. I believe it’s important to understand exactly what the global financial markets are and what trading on them entails.
According to Investopedia, a financial market is a “broad term describing any marketplace where trading of securities including equities, bonds, currencies and derivatives occurs. Although some financial markets are very small with little activity, some financial markets including the New York Stock Exchange… and the forex markets trade trillions of dollars of securities daily.”
Financial market trading, on the other hand, is an activity where traders/investors profit from the exchange of monies via the buying and selling of securities on the global financial markets. Each of the world’s financial markets is made up of five different types of primary markets: the Equity, Forex, Options, Futures, and the Indices markets.
Trading while preserving your investments
It is imperative that you trade wisely, considering all of the different scenarios when placing trades, in order to safeguard your current and future wealth. There is nothing worse than losing all of your money as a result of a foolhardy venture. Consequently, here are some tips to help you trade judiciously and sensibly:
The first place to start is to decide which online trading broker you are going to sign up with. Because of the rise of the information age, and the ease with which people are now able to access the internet, there are many fly-by-night online share trading firms opening up. If you invest with one of them, you run the risk of losing all of your money. Therefore, it is important to conduct an exhaustive research exercise in order to determine which is the best online trading partner for you to sign up with before you open an account with a broker
An important part of choosing an online trading partner to sign up with is determining what type of online trading academy the brokerage firm has on their website. Part of your research should be to look at each brand’s education centre. If they have an education centre full of quality resources from basic tutorials to advanced material, I would recommend opening an account with them; ergo, it is obvious that they care about their clients, and they want them to be successful financial market investors.
It does not matter which of the five types of markets you choose to invest in, the basics of financial market trading are the same irrespective of which type you decide to invest in. Therefore, in order to safeguard your initial investment, it is important to have an intimate understanding of the basics of financial market trading before you start placing live trades. Your trading company will have a demo platform for you to practise trading on. Once you understand the basics, it is time to have a look at the nuances between trading on the different types of primary markets.
There are many different trading strategies available for you to utilize when you are making your trades. These strategies can be divided up into three broad categories: long-term, medium-term, and short-term strategies. Which one do you use?
In my opinion, it depends on what the current market conditions are like as well as what your goals are. For example, in an unstable geopolitical and socio-economic climate where the markets tend to be volatile, it’s better to go with a short-term strategy. In this way, you can open and close your trade in a short space of time. A good example of short-term trading is known as day-trading. When placing trades, day-traders open and close their positions within the same day.
In spite of the current tough global economic conditions, financial market trading can be a successful venture if you are cautious and trade according to the market conditions. Utilize a short-term trading strategy and trade on small amounts or volumes at a time. In this way, you will a go a long way towards mitigating your risk and your monetary losses.