As we all know, going self-employed is the dream. Sure, you do get some people who hop back into the employed camp, but in general those that make the jump are there to stay.
Unfortunately, it is all but easy. After all, with all of the benefits on offer, everyone would be doing it if this were the case. Sometimes it's not about the prospect of running your own business and making a product or service work, but more about the financial implications of getting up and running. Suddenly, you are without that safety net of a 9-5 job, and this can be daunting.
It means that a lot of people will tap into all sorts of methods to keep their savings net bubbling while things get off the ground. Trading most certainly falls into this category, but it's got to be done right.
Through today's article, we will now look at some of the steps you need to do to ensure this is the case.
Setting your risk level
Whether you are engaging in share or CFD trading, you need to set your risk level from the outset. In simple terms, this refers to the amount of money you are prepared to risk for each transaction that you are part of.
Of course, some people push these boundaries more than others. It can range between 1% and 5%, but naturally, try to edge on the lower side during those initial months as you get going. The last thing you want is your pot to dwindle down to nothing in record speeds.
The importance of an exit
One of the principal mistakes made by the typical trader is to only look at when to buy. Once they have bought their trades, they don't have a clue about what to do next. In short, you need to know when to sell.
This is where planning is essential. You need to note down a stop loss if things start to go pear-shaped, while also having a profit target if things go the other way. From this point, you know exactly when to sell and move onto the next trade.
Keep a record of everything
Something else that can help you during the planning phase is to record everything. Sure, there is plenty of documentation out there on trading, but nothing quite beats your own knowledge. You want to know why you have won a particular trade, or why you may have potentially lost it. Write down every relevant statistic that you can think of and keep reverting to these figures so you know what to action in the future.
Review your trading
Following on from the previous point, make sure that you review each and every trade that you take part in. Again, even though you can read all of the market news and expert tips, nothing quite beats a post-mortem on your own work. You will soon get an understanding on why a trade was profitable, or perhaps why it wasn’t, and this will give you the ground work to work better going forward.