How to become a successful stock exchange trader: 4 practical tips

When you are a newcomer at the stock exchange or at any other market sharp turns are short to come. Nevertheless, you’ll learn a lot from taking such turns. The first thing to consider is that equity trading substantially differs from investment in stocks.  Investment in stocks means that you are aimed at the long-term benefits. When you buy companies’ stocks you hold them till their price will increase. At the same time, the equity trade encourages you to be very active. Contemporary technologies and special internet platforms enabled traders to conduct operations at the stock exchange 24/7. 

These are four simple tips to follow if you want to succeed as an equity trader: 

Don’t buy equities if you don’t have a concrete investment plan. At least it should contain a justification of why your investment in those particular equities will be profitable as well as how much profit you will receive in case of success.   The equity trade is a relatively short-term activity, but only to some extent. Some traders hold their equities for less than one day, while others wait for weeks before selling them. By planning your transactions you have higher chances to get more profit.   

Planning is good, but sometimes things are going not as planned. At some point, your plan may go completely wrong. That’s why in case unforeseen circumstances emerge it’s better to have a backup one.  The best way to stay on the safe side and protect your investments from unforeseen risks is to issue stop-loss orders limiting losses. If the price of your equities decreases to a certain level they will be automatically sold – in such way you’ll avoid additional losses. Many newcomers make a big mistake by neglecting preset stop-conditions. As a result, they sell their equities too late and endure big losses.  

You have to know everything about the market in order to accurately predict how the equity prices will change. Of course, it’s hard. Sometimes you need to spend the whole working day to conduct a proper market analysis. At the same time, such approach is your insurance from poor decisions. Unforeseen circumstances can emerge anytime and you have to understand which factors lead to its appearance. At the stock exchange transactions are conducted very quickly. In order to become a successful trader you have to be aware not only of events at a particular stock exchange, but follow all global economic and political developments. There is no other way to achieve your goals as a trader than to work hard.  

Nobody knows which factors will change the market within next several minutes. As you can’t take control over the risks which influence the equity market, you have to know how to manage them in a way beneficial to you. 

Risk management skills are of the highest importance when it comes to an efficient equity trade. When you are able to accurately assess the transactional risks and measure them against the potential revenue, you can take more informed investment decisions.   

Equity trade is an activity for those with courage. It’s a very complicated process taking place in an extremely dynamic environment. Even the most experienced traders are constantly stressed out. At the same time, a stock exchange is a very dangerous place: it’s far easier to lose a fortune here than to earn a dime. Thus, in order to make friends with equity trade and benefit from this friendship, you have to approach it seriously, wisely and with a high level of competence.