The phrase “practice makes perfect” can be applied to many instances in life, but perfect is perhaps not the most appropriate word when considering the development of trading skills. The potential volatility of markets and unpredictable real-world circumstances can catch out even the most rehearsed and experienced of traders, but that does not make practice a futile endeavour. If anything, it is the contrary; practice in a safe and simulated environment can educate new traders on how to respond to markets in the most effective manner.
In 2018 and beyond, trading is no longer the preserve of those who can dedicate all of their time to the endeavour. Part-time, “hobbyist” trading is becoming increasingly popular, a result of the ease with which trading platforms can be accessed. Traders are able to follow market prices on the move via smartphones, enabling a quicker response to any important changes. Despite that increased flexibility, it is important to set aside a regular time for practice.
It is widely advised that new traders have set routines, whether following the opening and closing of a market or making trades in a 24-hour market at a similar time each day. Therefore, it is useful to practice at the same time in which you are likely to be making meaningful trades. It is ideal that online trading platforms offer simulations that give traders a taste of the real world. It is essential to fully explore one of these demo platforms before jumping into the world of trading. These demo modes give users a virtual sum of money to facilitate a risk-free practice of strategies.
Yet even a demo may not be the most suitable starting point for a beginner, so some brands go one step further by offering educational material in the form of videos and online courses to give traders the best possible grounding in what can be a complex business. For example, Saxo offer a range of investment options but also make sure to take time to explain them in depth to new traders. These include specialist products like exchange traded funds, which are marketable securities that follow a collection of assets that have been divided into shares. Maintaining a firm grip on the terminology is a necessity to trade effectively, and it will take practice time to become completely familiar with types of indexes and investments.
Knowing your strategy and its steps inside out are essential to being able to operate quickly and sensibly. It is inevitable that traders will experience times of success and times of difficulty. The key is to maximise the length of the former by developing effective responses to the latter. Asking experienced traders for assistance is one of the most useful ways of gaining a better understanding of how to react to certain fluctuations in markets.
Ultimately, it is up to the individual to determine their own development and level of engagement. Trading should be whatever the trader wants it to be; the best way to find yourself as a trader is to take enough time undertaking research and building resolve before dipping into the markets. The best traders are those who can anticipate patterns and spot trends immediately, and the only way to develop those skills is through practice and experience.