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7 Elements to Consider Before You Start Financial Trading

In the 20th century, being a financial trader was a specific type of career. There remains a certain amount of stereotype attached to that role, yet it is clearly waning. Today, millions of people have taken up financial trading online, mainly thanks to the fintech revolution of the late 2000s, which gave everyone access to the world’s financial markets without the need for a wealth manager acting as a middleman.

That said, financial trading is a broad church, and many of us who do it might only trade as a hobby. Some might see it as a career path. Others might consider themselves part-time traders, and others might still look at it as a means of earning a bit of extra cash. Of course, with regard to the latter, nothing is guaranteed. Yet, if you have an interest in it, it’s something that you should not rush into, at least not without a plan.

Below, we list some steps to consider before you begin. Some are general considerations, whereas others are more specific. But they address some of the most important factors and can set you up nicely before you begin.

  1. Consider Your Financial Goals

This might sound like a throwaway statement, but a grave mistake a lot of traders make is not having a clear plan of what they want out of it. Everyone wants to make money, yes, but you will want to have specific – and achievable – goals in mind. Traders can make the wrong decision in terms of where the market goes, sure, but many inexperienced traders are also guilty of overtrading, not taking profits, or cutting losses in pursuit of ill-defined perfection. We will expand on this a little bit later in a section on budgeting.

  1. Determine What Type of Trader You Are

First off, let’s be clear that trading and investing are two different things, although there can be some overlap. Investors tend to buy financial products (stocks, ETFs) and hold them long-term for a profit. Traders are more focused on the short term, but there are many different types of traders – forex traders, stock traders, swing traders, sentiment traders, fundamental traders, macro traders, and many more.

Of course, your trading ‘identity’ will probably evolve over time. You might start not knowing simple things like, what are CFDs and how to trade them? All of that will come with time. But it’s best to ask some questions about yourself first. Perhaps you like to track the ebb and flow of the stock market? Maybe you are astute with algorithms and would like to employ them for trading forex. You may see yourself as a macro trader, using knowledge of global events to shape your indices trades. Most traders will have a specialist area, and it is arguably best to base it on what you are most interested in.

  1. Set a Budget

When considering your goals, you should set out a budget. Traders should only put into the markets what they can afford to lose. It should never be viewed as a gateway to easy money. That said, those willing to put the effort in can be successful. Trading is both an art and a discipline, and money management is part of the latter. Create a budget, perhaps starting low, of the money you are willing to trade each month. It helps you keep track, and it helps you learn.

  1. Start Following Successful Traders

Financial trading has a strong online community. You can follow traders on X/Twitter, YouTube, and Reddit. Many will share insightful trading tips, sure, but it is perhaps more important that they will discuss the mechanics of trading, allowing you to understand the mindset of financial trading. In addition, you should be aware that online brokers will often allow you to use copy trades, which mimic the trades of successful traders on the platform. It’s something to explore – or at least monitor – before you begin trading on your own.

  1. Use the Resources from Online Brokers

An online trading platform is not just a facility for making trades; It is also a resource platform, which will include educational materials, tutorials, webinars, blogs, and other tools. In short, there is a lot you can learn there before you start using the broker’s trading services. Moreover, you will also learn about the broker’s way of doing business, including fees (or lack thereof), commissions, terms for using leverage, and so on.

  1. Try a Demo Account First

You’ll note that we have continuously preached caution on diving in head first to the trading arena, and one of the best ways to get the experience without risking your wallet is to use a demo account (online brokers will provide access to these). You can even trade with MT4 and MT5 demo accounts, meaning you get the platforms that professional traders use. The benefits speak for themselves: You can trade in real-time with a demo balance, appreciating the ebb and flow of the market.


  1. Start Your Trading Journal on Day 1

A trading journal is a must for all aspiring traders – just ask any successful and experienced trader. It can be an online or physical logbook, but the key is that you keep recording everything: Your goals, your budget, your successes and failures, your predictions, and your analysis of market movements. You are entering into an arena where global macro and micro forces shape trillions of dollars of transactions every day. Your journal is your captain’s log, helping you navigate choppy waters and calm seas. It might seem like a simple thing, but you may look back on it in ten years as the most important element on this list.

Conclusion: Patient Traders Succeed in the Markets

The list above is long, and it’s certainly not exhaustive. It preaches a lot of restraint and research before you actually trade a dollar in the financial markets. But it is a simple fact that those who rush into trading are the most likely to lose money. Those who take a patient approach will be at an advantage once they start trading for real.