The first port of call for any would-be trader is to read, research and learn the markets and how they work. Just like starting a business or studying for a professional exam, investing the time to learn about the background and the inner workings of the markets, products and sectors in which you tend to invest is time well-spent, and nothing short of essential when you’re pitching yourself against colossal investment houses with access to some of the brightest and most experienced trading minds in the world.

Before You Start

Before you even consider opening a trading account, make sure you know what you’re doing and you’re at a stage where you’re comfortable with the risks associated with trading for real. That means no just knowing the basics, but also having a fair grasp of market dynamics, and how other, larger traders (with wider pressures from management and stockholders towards conservatism) who have the capacity to shape market movements are likely to respond to given indicators or results.

Do Research

The next logical step after the reading and research phase is to get started, and you’ll no doubt be itching to put the materials you’ve digested into practice and start making some money. Before you jump in feet first, we recommend that you take some time to dip your toes in the water, and experiment firstly with demo accounts and notional trading before you start risking your own money.

Practice Trading

Most brokers offer demo account facilities as a key part of their marketing process – use them. They are a wonderful training tool, and one that is hard to match with alternatives. Demo accounts provide the opportunity to try out your trading with zero risk, allowing you to see in figures while trading on real markets how your positions would have turned out had you been staking your own capital.

While it can be frustrating to watch trades move wildly in your favour when playing with virtual money, it’s more than a price worth paying for the comfort and peace of mind that comes with knowing there’s no risk to your trading when you first start out, and are naturally at your most vulnerable and inexperienced.

First Trade

When you’re ready to take the next step and get started trading, all you need is a broker account and you’re ready to go. By this stage, you should have sampled one or more virtual accounts, and by trying a cross-section of the different platforms out there you should be able to narrow down a favourite for your trading going forward. In addition to the interface and the look and feel of the platform, you should also try to make sure you’ve compared broker fees and trading commissions – particularly if you intend to trade over a shorter term.

Luckily, the market is a very competitive one, and brokers are practically falling over themselves to offer new traders the best deals. That said, it’s nevertheless important to shop around and check which of your chosen brokers are offering the best deal, with a view to maximizing your trading returns when you eventually get into full swing.

The key to trading the markets successfully is preparation, and it is strongly advised that you don’t rush into trading blind. Spend the time to develop your skills and know-how before you actually stand to lose anything other than your time, and set up a personal knowledge-management infrastructure of email updates, RSS feeds and calendars so you keep on top of what’s going on going forward. You owe it to yourself to trade wisely, and only by being prepared and as informed as practical can you help stack the odds in your favour for more consistent trading successes.

As a share trader, your job is to invest capital in financial markets for a profit. Unlike gambling, speculating in financial markets benefits from being predictable (to a degree), and outcomes are not dependent on the same degree of chance or luck. Ask any professional trader the amount of time they spend researching the markets and you may be surprised by the result. Trading is only a small slither of the successful investment process – researching markets, reading up on current affairs and interpreting price data take up much more of the working day, as part of generating trading strategies and potentially profitable opportunities while also defending against the potential risks the financial markets could pose.

Doing your homework as a share trader, engaging in researching, learning and interpreting information about the markets you trade, is fundamental to your success. But what should you research, and what information are you looking for to help shape your trading judgements?

Research Markets

Understanding the markets you intend to trade in and what makes them tick is critical to getting valuable research outcomes. Look at industries and sectors that contribute to the companies in your chosen markets, and think about both the macro and the micro influences that could shape their behaviour. Markets tend to behave conservatively in the round, but look for ways of identifying the key factors that have influence market price in the past. Get to know your markets before trading, both in theory and in practice, and following market trends and behaviours can provide invaluable insights.

Research Shares

Not all shares are made the same, nor do they necessarily respond in the same way as others. Some shares are more volatile than others, whereas some are much more stagnant and stable. Some shares are widely traded and are constantly showing activity, whereas others are traded only in small volumes in dark corners of the financial world. Before you consider any potential investment, you need to understand the individual share market directly, and how it behaves in different circumstances. Research both share behaviour and company performance – the more you know, the better able you’ll be to gauge investment opportunities.

Follow The News

The news and goings on across the world have a bearing on how individual markets behave, and indeed the price of shares across the board. As a consequence, any credible research strategy has to involve a close monitoring of news stories throughout the day, so that you are familiar with what’s going on in the world and can better interpret the market impact of different announcements and events. In addition to following the news, you can also anticipate key news items like economic indicators which care published at set intervals. The more keenly researched you are, the more quickly you can take advantage of price movements.

Research Prices

And of course no research plan would be complete without looking at prices, trends and share market price movements. Technical analysis is a crucial and fundamental part of researching investment opportunities, and to a large extent it marries well with understanding markets and the shares available, Charting is particularly useful for interpreting and reading market data, and can provide a keen basis for making successful trading decisions.