Expert advice on financial trading for beginners

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The emergence of new finance technologies has spawned a new generation of amateur traders, with an interest in the workings of global financial markets, a study has found.

Research into search trends, conducted by Spread Co, shows a significant year-on-year increase in the number of people searching for spread betting related terms.

David Morrison, senior market strategist at Spread Co, has some advice on financial trading for beginners:

Find your style

Before you start, work out what style of trading suits you best. There is a variety of different trading styles such as day trading, medium or long term approaches to choose from. Short-term traders tend to do best in range-bound markets whereas longer-term traders do better when riding a trend.

Get creative

Every trade starts with an idea. Trading ideas can come from carrying out research or observing the world around you. Ideas can be based on big themes such as where our next technological advancements will come from or smaller ones like identifying which shops are doing well on your high street. Why not consider how innovations are affecting your own day to day life? Who’s providing them and do these innovations have applications elsewhere?

Gather information

Make an informed decision. For instance, look at which central bank is talking about raising interest rates and which ones about cutting? If you’re trading individual equities, what does the company’s balance sheet and income statement look like? All this can help you to make more sensible decision about a trade.

Plan carefully

Create a trading plan that will help you identify where to buy and sell. Don’t worry about becoming an expert. Even a basic understanding of support and resistance levels on a chart can make all the difference in choosing good entry and exit levels.

Walk your own path

Do your own homework and don’t follow tips from others.The biggest problem with being influenced by another trader is that you can really never know another person’s risk tolerance. They may give you a perfectly good reason for entering a trade, but no one can control the way the market moves.

Test yourself

Think of every trade as a test of your research and analysis. If you’ve done your money management properly, then it won’t be the end of the world if you’re wrong about one particular trade and another opportunity will soon come along.

The search is on

The study found that search terms including CFD trading (80 per cent increase), spread betting strategies (70 per cent increase) and what is spread betting (50 per cent increase) all saw double-digit increases in search through Google over the past 12 months, alongside searches for stock prices for companies including Barclays (42 per cent increase) and HSBC (48 per cent increase).

However, the ten most searched for share prices over the past 12 months do not correspond with the best performers in the London Stock Exchange, suggesting amateur traders are not identifying the strongest opportunities.

Shameer Sachdev, head of marketing & sales at Spread Co, said: “Global events like the US election and Brexit have lead to significant news coverage on the forex markets and stock exchanges. This is naturally leading to increased awareness of the opportunities available through trading and betting on the financial and forex markets.

“This is combined with improved accessibility to trading and spread betting platforms that is making these activities more accessible to members of the public.”

“These searches for research-related spread betting terms suggest that beginners are doing the right thing and taking the time to find out their information before opening an account and investing their money.”

Top 10 most searched-for shares in past 12 months:

  1. Lloyds Share Price

  2. Tesco Share Price

  3. BT Share Price

  4. Barclays Share Price

  5. HSBC Share Price

  6. BP Share Price

  7. Standard Life Share Price

  8. RBS Share Price

  9. Aviva Share Price

  10. Royal Mail Share Price

Biggest-rising stocks in LSE in last 12 months

  1. Ferrexpo 479%

  2. Hochschild Mining 202%

  3. KAZ Minerals 166%

  4. Vedanta Resources 153%

  5. Evraz 147%

  6. Anglo American 139%

  7. Cambian Group 129%

  8. Georgia Healthcare Group 126%

  9. Fenner 109%

  10. Glencore 108%

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