Clem Chambers offers some practical assistance on getting started as a trader.
A young trader asks: I want to make money from financial markets. What are the basic steps to getting started?
The very first thing to do is open an account and fund it. This may take longer than you think. Set up a regular standing order from your bank account transferring as much as you are comfortable with into your investment account each month. Your minimum position should be £1000. As you build up your investment fund, read books on investing.
Trading is the equivalent of buying a 1000cc motorbike. It takes experience. Invest first, then think about trading when you make good profits from investing.
Join an investor and read the comments on the bulletin boards carefully. Take very careful note of people losing their shirt. Study the waffle and lies, the excitement and disappointments.
Keep in mind that people who make money don’t tend to make much noise. They do not tend to buy ‘crazy’ stocks. There is a hell of a lot of risk in these ‘crazy’ shares. Follow the sensible people; read up on their methods and ideas. Remember a diversified portfolio spreads your risk.
Pick stocks by building a selection process derived from books on investment you read and after studying investors on the internet. Learn what they look for when selecting stocks.
Hold on to the following belief: ‘If you think it’s a great pick, it very likely isn’t. If you know it’s a good investment – then it could be!’
Remember, there is no easy way to make money through shares. If there was, everyone would be doing it. It’s hard. This is why few people buy stocks. It’s easy to gamble your money away with shares but much harder to build wealth. It takes hard work, patience and determination.
Remember, bank robbers rob banks because that is where the money is. Like a fat worm to a trout, the lure of easy money is powerful bait – for the greedy. Do not be greedy. Markets punish the greedy. They reward those that take care and invest with skill and patience.