Stock brokers and traders appear to have a great life, closing deals each day and taking home bundles of cash. Unfortunately however the reality is far less glamorous and involves a great deal more hard work. Perhaps you have seen the ads online that say they can teach you how to trade in just a week, and whilst this isn’t a fraud, it is slightly more convoluted than that. My good friend Michelle L Marquez has been trading for many years now and she was kind enough to offer some insight for those of you who may wish to get started with trading, let’s take a look.
Understanding the Laws
The letter of the law is very important when trading and Michelle says that you must always make sure that you are trading legally, and that you understand what these laws are. The Securities and Exchange commission is in place to prevent any kind of wrongdoing, and as a trader or a group of traders it is essential that these rules are known and respected. The SEC is a highly respected group which helps with arbitration and with monitoring of trades, and avoiding any contact with them is vital.
Understanding the Market
Michelle speaks about the worrying number of traders who get started in the business before they have any real understanding of the financial markets and its impacts. Anyone can make a trade from home and as long as it is just their money then there is no real threat, other than losing money. What Michelle says is even more worrying is when these newbies are trading with someone else’s money, after promising a client that they have what it takes to make them money. The worst situation for this Michelle tells us is with day trader who spread bet for huge gains, but this can also come with huge losses if you haven’t understood the market.
Having a Strategy
All successful traders, Michelle included, have a strategy which they employ when making trades. These strategies will generally be played out in a particular market, futures for example, and it will be a system of analysis and forecast which they have done time and time again. If you want to become a trader, Michelle stresses the importance of having a strategy when it comes to which markets to trade on, how much to trade and also having an idea of when to get out.
Conclusion
Michelle alludes to the fact that anyone wishing to get started in trading should spend at least 6 months learning about the industry and using simulators to help them make their way in the industry. In order to learn sufficient information about the world of trading, special attention should be paid to the learning of the markets, the understanding of the rules, and the formulation of a strategy.
