Trading Options for the Inexperienced: 3 To Consider in 2012

The terms trading and investment are vague and diverse, and have different connotations within a range of alternative fields. When it comes to the open financial market, they can also be applied to a number of different money making vehicles, each of which offer their own distinct challenges, benefits and dangers to inexperienced traders across the globe.

This is why the first step as a novice trader is to consider the multitude of options at your disposal carefully, and select one that allows you to simultaneously minimise your risk while maximising any potential profits. While this may seem like a grand aspiration, it is possible with dedication, patience and a keen willingness to learn.

ŸÂ  Spread Betting: Spread betting is one of the most popular forms of trading in the financial market, and there are various underlying reasons for this. Essentially, it is a derivatives product that enables you to trade the individual price movements of a number of financial markets, and this includes currencies, shares and physical commodities. Offering the option to both go long when you buy an go short when you sell, it is possible to trade conservatively and guarantee a financial return regardless of the condition of the market. Like any form of trading it is not entirely risk free, but it is at least an option that helps to minimise an investors gamble.

ŸÂ  Forex Trading: The foreign exchange market is the single largest trading platform, and one of the most unrestricted and versatile for inexperienced investors. Offering minimal transaction costs, outstanding liquidity and the opportunity to earn significant returns based on margin, it has emerged as a core favourite among investors with a desire to make an impact within the financial market. It also gives traders the chance to profit in any market conditions and on your chosen currency pairs, in an environment where there are no limitations of daily transactions such as those associated with the futures market.

ŸÂ  CFD Trading: Trading CFD’s is another viable option for newcomers to the financial markets, most notably because of it’s risk management features. When you first establish your CFD trading account, you have the option to customise it fully and place stop losses and limit orders on each transaction that you make. These are your exit strategies in times of need or in the aftermath of a poorly judged investment, and allow you to minimise any potential losses that you are faced with. Given that you are bound to make mistakes as a first time investor, your ability to manage the consequences of your errors will go a long way to determining your eventual success.

Choosing the Right and Most Profitable Option

These options all offer genuine benefits to aspiring or independent traders, and it is your task to use your existing market knowledge as a key decision making tool. Although they are not entirely risk free, they each boast a degree of flexibility and liquidity that allows for largely unrestricted trading, and ultimately soften the financial blow of any mistakes that are made through the course of learning.

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