It can be hard to quantify the exact size of the world’s financial market, although the global equity market capitalisation value peaked at $105.8 trillion in 2020 following a year-on-year increase of 18.2%.
What’s more, the global forex market now boasts an average daily trading volume of $6.6 trillion, with this having increased from just $5.1 trillion in 2016.
Such large numbers and potential gains are obviously appealing to aspiring traders, but no single market should be considered risk-free and it’s important to approach any investment with caution. Here’s how you simplify trading regardless of which asset class you’re targeting.
#1. Use a Demo Account
If you’ve ever completed a metatrader 4 download, you’ll know that you can access a so-called “demo account” through this type of trading app.
This is a must for new and inexperienced traders, as a demo account enables you to access simulated and real-time market conditions and execute orders without risking your hard-earned capital.
You can typically use your demo account for a period of between three and six months, allowing you to hone your skills over time and bridge the often cavernous gap between theoretical knowledge and practical trading experience.
At this stage, you can approach the real-time markets with far more confidence and hopefully make more informed and profitable decisions.
#2. Consider the Benefits of Social Trading
Social trading isn’t necessarily a new concept, but it’s one that beginners may not be familiar with if they’re new to the marketplace.
In simple terms, social trading refers to the notion of operating within dedicated communities (either online or through social media channels), with a view to sharing potentially crucial information and copying the trades of established and successful traders.
The latter practice can be particularly fruitful, as it enables even novice traders to learn directly from successful traders while replicating lucrative orders in real-time.
#3. Start Small and Scale Your Efforts Organically Over Time
On a final note, you can also simplify your trading experience by adopting a patient and disciplined approach and opting to walk before you can run.
In practical terms, this means starting small and scaling your efforts organically over time, in line with your profitability and the experience that you’re able to build as a trader.
For example, forex traders should start out by focusing on just one or two major currency pairs (such as the EUR/USD), which are highly liquid and the subject of regular media commentary and news updates.
Over time, they can evolve to incorporate more volatile, exotic pairs into their portfolio, before considering alternative asset classes that provide balance and natural diversification.