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How To Improve Your Trading Knowledge
‘Knowledge is power,’ as the saying goes, and nowhere is this truer than in the world of financial trading. Thanks to the internet and the automated tools and online brokers available, it’s possible to get started quickly with only a basic grasp of trading principles and techniques. However, if you’re going to stay in the game long term and hope to turn a steady profit, then it’s essential to keep broadening your understanding and filling in gaps in your trading knowledge.
No trader knows it all, and there’s always another lesson to be learned. Financial trading is a fast-moving world, and while there are some basic perennial rules that are unlikely to change, new factors are constantly coming into play in the form of tools, asset classes, and, of course, the constant updating of technology. Whatever level you’re currently at, you should always be looking for ways to improve your trading knowledge and polish up your skills.
Happily, we live in an age when there is a wealth of online resources to help both the trading neophyte and the experienced investor. Whatever area you need to know more about, the chances are that there are invaluable trading guides online that can be accessed free of charge. Another advantage of internet guides is the opportunity to ask questions, read comments and check out different points of view.
As well as written guides and articles, there are webinars, tutorials, forums, and online courses to help you develop your knowledge. If you can’t find the specific information you require, then ask! People are generally glad to share what they know, and no one will think that you’re an idiot for posting the question. Every trader has to start somewhere, and the one who obviously wants to learn more gets more respect than the one who thinks that they know everything.
Know what you don’t know
You can’t fill in the gaps in your trading knowledge until you know what those gaps are. Keep a journal of your trading activity to identify your strengths and weaknesses. Make a note of anything you don’t 100% understand. Analyze why a trade was unsuccessful and what you need to figure out in order to do better next time. This will quickly highlight the missing pieces of your education that most urgently need to be filled.
How to improve trading knowledge: go back to the basic
Sometimes, new traders go straight to learning all the technical skills they need but forget about getting a grounding in basic finance in economics. This is all too easy to do, perhaps because we all assume that we have a basic working knowledge of how money works and can muddle through on that until we have time to study the subject properly.
Well, that time is now. If you don’t thoroughly understand subjects such as inflation and compound interest, then you should remedy this oversight before you go any further.
Take a course
Studying under your own steam using online resources, books, and specialist publications is all very well, but sometimes you can’t beat a properly structured course with an expert tutor to guide you. There are many different options out there, from all-around finance or trading classes to more specialist subjects. Many offer certification at the end, which can be useful if you want to go into trading professionally.
Taking a course can also teach you discipline, which is an essential quality for a financial trader to have. Successful stock trading is all about developing a strategy and sticking to it, day in, day out, and a structured study program requires similar skills. Joining the dots between different aspects of trading and finance can help you build up a solid, reliable knowledge base.
Follow the market and other traders
It goes without saying that you should follow the market every day, even if you don’t currently have an active interest in it. Take out a subscription to the Wall Street Journal and a range of publications with good financial coverage, and keep an eye on news and analysis sites such as Yahoo Finance and Bloomberg.
You can also learn a lot by following experienced traders, even if you’re not actually copy trading and imitating their trades. Try to understand why and how they do what they do. Analyze their successes and their failures. If you can, find a mentor or trading coach who can help you stay disciplined and hold you accountable, as well as give you tips and advice.
A good trader never stops learning, and there are always new resources to check out. Stay humble and stay hungry. The more you learn, the more you can earn – and the sooner you identify the gaps in your knowledge, the sooner you can fill them in.