Stock trading is a business as it’s done for making money. Therefore, like in a business, in stock trading, you need to do solid planning prior to making any buy/sell/trade. But, is stock trading a good option for students wanting to earn part-time income?
Stock trading is a good idea, but you definitely cannot expect to earn steady part-time if you are just beginning to trade. However, if you give more time daily and know the basics and trade time and again with fixed goals and rules with a small amount, it will surely be worthwhile.
As a student, don’t just see stock trading as a profitable field to earn a considerable amount of money as if you look it that way you’ll end up losing your hard earned money. According to the research, more than 80 percent of people lose money in stock trading and result in leaving it altogether. Therefore, trade with little amounts, earn a bit and learn on a daily basis from your mistakes. Time will come when you’re seasoned or experienced and is able to trade for high amounts of money and who knows it can be your financial support. The best thing about stock trading is that it’s the only profession wherein you’re not dependent on anyone. The output and gains depend on you as well as on your actions.
Stock Trading: Tips for Students to Become Successful
Even if part-time, you have to follow these tips to become successful in your trading journey:
Know how much money you are willing to risk on every trade. A lot of successful trader risk less than one to 2 percent of their account for every trade. So, if you have USD40, 000 trading account and willing to risk .5 percent of your capital on every trade, your highest loss for every trade is USD200. Set aside an extra amount of money you can trade with and you are ready to lose. Keep in mind, it might or might not happen.
Look for cases wherein supply and demand are radically imbalanced, and utilize these as the entry points.
The financial market is like anything else in life, once supply is near collapse, and there are still willing buyers, the price will go higher. If there’s surplus supply and there are no willing buyers, the price will drop. Students are taught to know the turning points on a price chart, and you can do the same through historical learning examples.
One of the essential lessons that you have to keep in mind as a student is to know a proper risk-reward ratio. As trading experts point out, this enables students to lose small and win big. This also allows students to come out ahead even when you have losses on lots of your trades. As a matter of fact, if you gain lots of experience, the risk-reward ratios of as high as five is to one or even higher might be obtainable.
To become successful in stock trading, you need to partner with a reliable broker that offers MetaTrader5 trading platform