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New to the stock market?

If you're new to trading and not exactly sure which direction to head in, here's a few questions you can ask yourself that may help you on your way...

What type of trader do I want to be?

The most obvious answer to this question is 'a successful one'. But what works for one person may not work for someone else. Some people enjoy the fast pace and high adrenaline levels they get from trading currencies. Other people prefer an 'easy as she goes' approach and invest in 'blue chip' stocks for months or years at a time. If you're partial to trading options then you'll need a firm understanding of the theory behind how they work. Suffice to say that no matter what you decide to trade and how you choose to trade it, you need to make sure that you possess sufficient knowledge in your chosen approach, and that it suits your trading style, expectations and time constraints.

How much time do I want to put in?

The answer to this question will be one of the key aspects of what will define the type of trader you want to be. Do you want to trade full time, part time or for 20 minutes a day?  Some trading strategies require more time investment, others require less. Similarly, what you're trading, whether it be stocks, options, CFD's, currencies etc. will also affect the amount of time you need to spend to get the results you want.

What do I want to get out of it?

'To make a lot of money' would be an obvious answer. But do you want to make a lot of money in a short amount of time or are you looking to make a lot of money over a long period of time. Typically, the shorter the time period, the higher the risk. You need to figure out how much you expect to get out of your trading and what risk levels you're prepared to trade at.

What trading strategy am I going to use?

To trade the markets successfully you will need a strategy. Amongst trader's this strategy is known as a market share trading system. The market share trading system is a set of rules that tells you what to do no matter the market circumstances. Your trading system forces you to make decisions based on proven market events – rather than emotions – and if your trading system works, this forces you to profit.

A very basic example of a trading system would be to buy when a slower moving average crosses a faster one and then to sell when the reverse happens.

Then you'll be wanting to test your trading system to see if it actually works. One way to do this is to 'paper trade'. Paper trading involves watching the market for circumstances that match your system rules and recording all of your profits and losses, without actually making "live" trades. This can be quite time consuming, but is always a worthwhile time investment.

The good news is that PhoenixAI features a system builder and a system simulator. The builder lets you design your own trading rules using any combination of the hundred or so indicators included in the software. The simulator lets you test it over historical price data and gives you pages of useful feedback. These two features alone could save you a massive amount of time. For video tutorials on how to create and test your own trading strategies click here.

OR To learn more, check out How PhoenixAI can enhance your trading.