Active trading has surged in popularity over the past decade as Internet connections have become faster and more sophisticated programs for advanced computers have been created. Due to developments such as these, today’s traders are armed with better tools to execute trades faster and easier.
But as rewarding as this job and/or investment might be, not everyone who has tried their hand at trading has succeeded. Although this situation is true in all financial fields, or any field for that matter, the world of active trading has become extra competitive for the same reasons, which resulted in such a booming industry.
Brokers and investors might be wary of this type of trading, and rightfully so, as it’s risky and can cost you a lot of money if you aren’t careful. Nonetheless, there are key strategies you can apply to avoid the pitfalls of active trading. Utilising patience as well as diligence to study and scour the market for trades and good potential investments, you will reap the rewards of a meticulous approach.
If you’re still applying for a job as a broker, be sure to maximise your job searches. For instance, there are many relative terms to ‘broker’ in active trading like being a day trader, investment assistant and so on. Don’t limit your search to job sites and remember to read the job descriptions thoroughly. Job application sites such as City Jobs also have additional filter options like ‘search radius’ in conjunction with the usual city or town selection so you can narrow down the list of the companies with offices closest to your location.
Consider the brokerage firm’s trading footprint
When checking out a trading firm or company, don’t just look at the best stats that are usually advertised by the company’s management. Take time to research the company’s track record as a whole, including its lowest periods and how the firm overcame such challenges. You may even acquire some tricks from those experiences aside from learning more about the company.
Increase your market value
There are tons of online tutorials that can provide you with information on the basics of active trading. If you can, aim for certifications or licenses which you can add to your CV.
Look at the big picture
If you have successfully landed a job, then start by looking at the bigger picture. Though active trading focuses more on short-term or daily trades as opposed to ‘buy and hold’, it’s also helpful if you make a long-term plan. As you monitor the market for your day-to-day buying and selling, also consider the trades that will be great for growth in terms of overall market trends. Index and exchange-traded funds are good examples of long-haul investments.
Put a lot of effort into studying the common trading strategies like day trading and scalping. There are many brokerage firms that have free seminars and demos which will give you the starting resources you need. Experience is still the best teacher, but if you’re not knowledgeable on the fundamentals, you’ll struggle to progress.
Prepare for psychological and emotional impact
Becoming familiar with the psychological aspects of active trading is crucial as well, as this field does not rely solely on your mental capacity. You will have to face a range of challenging emotions including fear, envy, worry and losses. Fear is one of the main factors people struggle with in trading, causing some to panic and act on impulse leading to negative results.
Give yourself a break
The legendary trader George Soros emphasised that you need to know when to stop trading. Once you get in on the action, it’s perfectly fine to concentrate and get immersed in the processes, but knowing when to stop is also crucial for you to evaluate your completed actions and to plan for your next trading setup.
Keep things simple
There are numerous tips on how to adhere to the best timing in trades, but the bottom line is to keep things simple. Don’t just blindly trade and trade much more than you can currently handle. Understand the risks involved and once you set your boundaries and plans, the rest will pan out relatively smoothly. If things suddenly go wrong, you can minimise losses, as you will have made preparations beforehand.
The world of active trading may be challenging at first but just like any other field, once you’ve grasped the fundamentals of the business, things get much easier. If you have any other tips for aspiring brokers and traders, be sure to share them in our comments section below. And to all those who have decided to enter this line of work, best of luck on your new endeavour!
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