Five Ways to Become a Better Trader

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The financial market has many opportunities and over the years has produced many wealthy people. In the Forbes list of the wealthiest people in the world, a good number of them have made their money in the hedge fund and investment industry.

In the past, the barriers to entry this industry were huge. This is because you needed a large amount of capital to get started. You also needed money to access trading software and other proprietary products like terminals and news portals. Today, with online trading companies, you can start your own ‘hedge fund’ with as little as $500. This article will explain five ways you can become a better trader.

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Read

The financial industry is very wide. This means that you need to take time to read so that you can understand how it works. This applies even if you have a background in finance or not. Taking time to read will help you understand how the financial market works, how to understand the price quotations, and how to manage your risks properly. Fortunately, you don’t need to go to a local library to find the books. You can find hundreds of trading books in online bookstores like Amazon.

Practice

As you read, you should keep on practicing. The best way to do this is to create a demo account. This is an account that simulates everything in the live account. The quotes you find in the demo account are the same you will find in the live account. You should practice everything you read and see how it works in a demo account. As a rule, you should fund your demo account with the same amount you intend to start trading with.

Patience

A major reason why most people fail in the trading industry is that they lack patience. They start trading, make some profits, and then think they are good traders. They lose money ultimately. To prevent this, you should take your time before you start trading with real money. It is recommended that you take at least three months before you make your first deposit.

Mentorship

Like in all industries, you should focus on having a good mentor. This is a person who has been there and done that in the financial industry. This could be your friend, colleague, or a professional expert. The benefit of having a good mentor is that it will help you make proper decisions. The mentor will guide you on how the market works based on their experience.

Broker

As a trader, an important decision that you will make is on a broker you use. Your broker should have a number of qualities. First, the company should be regulated by one of the major regulators. Examples of these regulators are the Financial Conduct Authority (FCA) and CySEC (Cyprus Securities and Exchange Commission). The benefit of using a regulated forex broker is that it will help you avoid falling prey of scams.

Second, the broker should not charge you a commission per trade. This is because the cost of commissions are usually significantly high. Instead, you should consider a broker who offers tight spread. Third, the broker should have the ability to protect you from negative balance. Fourth, the broker should have excellent customer service. Finally, you should go for a broker that offers mobile and desktop trading platforms.

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