Many Australians have become frustrated at having to work from cheque to cheque. In times that are partially defined by a rising cost of living and flattened wages, some individuals are beginning to think outside of the box in terms of sustainable wealth management. An extremely innovative (and rewarding) method could very well be a foray into the world of the stockbroker. While this may have been more fiction than reality only a decade in the past, there are now a milieu of platforms available which can dramatically affect the ability to turn a profit. Let us examine some of the most basic principles behind stockbroking.
Choosing Your Field of Expertise
The world of the stockbroker is a varied as it is rewarding. As every trader is different, you will need to appreciate your strengths and weaknesses. So, first begin by asking a few basic questions such as:
- Are you interested in short- or long-term goals?
- Which sectors interest you the most?
- Can your prior experience aid in your present endeavours?
- How much do you expect to earn?
Keep in mind that in the vast majority of cases, stockbroking is more of a hobby than a full-time job. Should you begin to earn a substantial income, this could quickly change.
Appreciating Fluctuation Versus Volatility
Many beginners are turned off by the fact that the markets can be volatile at times. Whether referring to the ASX, the FTSE or the Dow Jones, this is inevitably the case from time to time. However, there is an appreciable difference between day-to-day technical fluctuations and a decidedly volatile marketplace. Knowing the difference between these two situations is another important skill to master over time.
The Right Trading Platform
Trading platforms can be envisioned as the electronic “springboards” to future success. Without a solid foundation, you can never expect to succeed. This is the reason why knowing which architecture to utilise is so very important. Compare and contrast different portals. Ask questions such as:
- Does the framework support mobile phones?
- What types of customer support are available?
- How many different underlying assets can I trade?
- What is the online reputation of the site?
- How intuitive is the software?
Starting off in the right direction has just as much to do with the platform as it will involve the strategy that you employ.
Funding is a final metric that should be addressed. Funding your trades in the right way will have an incredible impact upon your ultimate profit margins. Not only should you look for platforms associated with the lowest fees, but you need to be able to access your funds whenever desired. Such streamlined services are hallmarks of a quality firm and you should never settle for anything less.
This is only a brief overview of some of the factors to consider when taking your first steps into the modern world of stockbroking. Please refer to CMC Markets for additional tips, advice and relevant strategies.