As you prepare to start trading, some basic tools must be in your possession to smoothen the experience. These tools are trading capital, internet connection, computer, trading platform, and a trading strategy. Once these are set up, you should be ready to execute your first trades.
1. Trading Capital
Trading is like any other business where you require an initial capital that will allow you to execute trades. It is advisable that when trading, you consider using money that is not borrowed. Avoid taking loans from banks, friends, or family members as such capital could put you under pressure.
As you work to pay back the money in time, you might make careless mistakes and lose every coin. Using part of your savings is the best way to get trading capital. If you have a bunch of inheritance, then you are lucky. However, don’t use the entire amount but a reasonable portion, which you are comfortable losing in the worst-case scenario.
2. Internet Connection
Most trading is done online, which means you must have 24-hour access to the internet. It could be time to connect if you don’t have the internet at home or in the office. Also, you might need portable Wi-Fi while away from the house or office. There are many internet providers with some of the best offers. Research and settle on your most preferred to get your home or office connected.
3. Trading Computer
You don’t need an expensive or complicated computer to start as a trader. A standard laptop with the latest software will make you comfortable trading. Also, if you are not ready to start trading real money, you can always use a laptop for trading. The computer will not only allow you to install the latest software, but it will offer flexibility as you can use it from anywhere.
Most beginners rush to buy expensive computers, thinking they will impact their trading results. It is not always the case. Any good training laptop, proper knowledge, and risk management will keep your trading consistent.
4. Trading Platform
You might face difficulties in your trading journey if you don’t have the right trading platform. The most popular trading platform is the Meta Trader 4, but an updated version and currently the most preferred is the MetaTrader 5. These are common platforms among traders, but you can research more to find the most suitable for your needs.
Once you install this software, you will need to learn the basics. Online tutorials and pdf documents may guide you on their use. Also, it’s best to navigate the platforms and familiarize yourself before you start trading. Use a practice account while learning how to use the software to be safe if you make a mistake.
5. Trading Strategy
As a beginner, you may need to take a course on trading to know how to develop your approach to the markets. Everyone has their way of executing trades and filtering different markets. Avoid picking any strategy online and using it as your approach. It is okay to modify another person’s trading strategy, but it’s best to do this with solid trading knowledge.
A good trading strategy has specific entry and exit rules. It helps you stick to your maximum risk amount and has a specific trading timeframe. Also, it will guide when to trade certain market conditions and when to stay out of the market.
Other than the five tools, there are other elements that a trader must keep in mind. These include:
Selecting the Right Broker Firm
Thousands of trading firms offer you bonuses, courses, and specific benefits. Take your time to find a broker that meets your expectations. For example, use a properly regulated broker with a great reputation amongst other traders. Read online reviews from trading forums and speak out if you have concerns about certain brokers.
Mobile Trading Apps
It is unnecessary, but it would help if you had a mobile trading application. These applications allow you to observe or execute trades at any time or place. Also, some broker firms have mobile applications that traders can use to make deposits and withdrawals.
Wrapping Up
Don’t rush to start trading when you lack any of these tools. Taking your time and ensuring everything is per your expectations before you start making trading decisions is crucial. Remember to stick to your trading strategy and maximum risk.
