The size of the world’s financial market is huge, with the foreign exchange generating an estimated $5.3 trillion in daily trading volumes. This is central to the appeal of forex trading, which offers tremendous liquidity and margin-based returns to investors.
Then we have the stock market, which remains one of the largest financial entities in the world. The entire world’s stock exchanges currently have a capitalization of $80 trillion, which this number has increased by 320% since 2009.
To participate successfully in this market, you’ll first need to learn about its fundamental features and the best trading techniques. Here are some tips to help you on your way:
Understand the Importance of Determinism
Before you start learning, you need to understand the importance of determinism and its role in stock market trading.
Determinism is a doctrine that suggests that external causes determine all events to the human will. From an investor perspective, there are underlying laws that govern change in the stock market, and these are often seminal regardless of the prevailing market conditions.
With this in mind, developing a deterministic outlook can help you to avoid emotive trading and achieve sustainable gains over a prolonged period of time.
Learn from the Greats
The next stage is to learn about stock market trading and the theory behind it, and one of the best ways to achieve this is to follow those who have already achieved success as investors.
This will provide you with perspective and insight into successful strategies, many of which have stood the test of time and retain universal value in the contemporary marketplace. This is why social trading has become so popular online, enabling investors to replicate the most generative strategies for their own benefit.
Some of the most famous stock market traders include Warren Buffett, George Soros, and Peter Lynch, while hedge fund expert Jack Schwager has also penned several books on his own experiences.
Use an Online Demo Account
With a theoretical understanding behind you, the next step is to apply this in a practical and real-time market environment.
This is where demo accounts come into play, as they bridge the gap between theory and practice and enable investors to hone their strategies in a risk-free setting.
Demo accounts, which are offered by all online trading platforms, simulate real-time market settings and allow investors to execute orders using fake currency.
Over a period of six months, this allows investors to develop effective strategies and several viable risk-management tactics.