Trading Shares for the First Time

Perhaps the number one rule you should always bear in mind when trading the stock markets, whether you're trading for the first or five-millionth time: be conservative with your investment capital.

first time trading shares

That doesn't mean you should be a trading wallflower, and being too conservative could hamper your upside gains. But maintaining your investment capital should be your first aim as a trader, and an omnipresent consideration as you continue to improve your trading skills.

It is also essential to remember that you can leave no stone unturned when deciding which positions to take. Knowledge is absolute power in the world of trading, so it's imperative you take steps to make sure you're in the loop and fully up to speed with going on in the markets and the wider economies to which they relate.

That means signing up for market news, keeping a close eye on current affairs throughout the day, and planning ahead of time when particularly significant announcements are scheduled to be released (taking into account prior analyst forecasts of the results to determine whether a particular announcement turns out to be a positive or a negative for your share price). Whatever happens, there's no excuse for being underprepared for a trade, and all too often beginners are quick to make snap judgements about market movements without analyzing the full picture first - with frequently devastating consequences.

Finally, open a demo account as a first and foremost step to trading for real. Demo accounts are not only a great way to try out different broker platforms and to help you find the interface most suited to your trading style, but they also provide the perfect sandbox for developing your trading logic and putting your theory into practice. Allowing you trade on real shares (only with virtual money), a demo account allows you to notionally open and close positions as you would when trading real capital, and can be a real eye-opener for those traders taking their first steps.

Understanding the stock markets - what they are, how they work and their tendency towards volatility and price movement - is the Holy Grail of share trading. While it's seldom possible to guarantee how the markets are likely to respond, it is nevertheless still practical to get inside the market, and traders that are prepared to invest their time and energy in learning their craft will be rewarded many times over as they progress with their trading career.

Read more how to successfully trade shares and investing mistakes to avoid.