Tips for Starting to Trade Overseas SharesJuly 24, 2018
While trading was once considered a game of numbers for the rich, technological advancements in the financial field has made this investment opportunity more accessible than ever to everyone. Additionally, the opening up of international markets has allowed for investors to invest in great opportunities overseas. However, whether you are a complete newbie in the world of trading, or you are just a local trader looking to level up your game, starting to trade overseas shares can seem like a behemoth-like task. Everything from finding the right brokerage company for you, to knowing what stocks to buy can be really difficult. We have therefore compiled few tips that can guide you when getting started so that you can get more confident in trading faster.
Find out what market you want to trade in
It is of utmost importance to identify potentially good markets and assets to invest in, and then strategise on how best to access that market. With many booming markets in the world over, choosing a few markets and sticking to them may help you move forward faster as your investment path is better defined. Asian countries such as Thailand are on the rise and may therefore be a good place to start as a beginner.
It would also be advisable to set up a dedicated bank account in the currency of the market in which you are trading: for example, a dollar account if you are investing in the American market. This is because exchange rates can really undercut your earnings, and make the predictions of your profit margins unreliable.
Find a brokerage company that allows for you to trade in that market
Your choice in a brokerage company could very easily be the difference between scraping through and earning a living through trading. A good broker, whether online or a company, will aid you trade with minimal charges. Oftentimes, a trader’s profits are massively cut down by what business mogul, Warren Buffet, refers to as frictional losses. These include commissions and transaction fees which are charged by the broker in exchange for their services.
Create a trading plan
One thing a new trader should never overlook is creating a trading plan or strategy. This is a document akin to a business plan and should state your main goal as a trader: for example, to make your first million or getting out of debt. Your asset allocation should also be cited. As a beginner, it is advised that you do not put more than 5% of your trading capital into a single trade.
It is also important to cite risk limits that state how much you can afford to lose on a single trade, as well as factors that may affect the behaviour of your stocks, such as global events or regional crises. A trading plan ensures that you keep making investment decisions based on logic rather than emotions, thus curbing the risk of profuse losses. It is important to avoid changing your trading strategy often as it limits how much you know about each strategy you try, making you a jerk of all trades and a master of none.
Keep a trade journal
This is a tip that is implemented by all the great traders but often overlooked by beginners. Keeping track of all your trade moves in a trade journal can also help you keep your trading logical and thus keep losses at a minimum. The reason and mindset when making trading moves should also be noted down for future reference.
Use technological tools to your advantage
With advances in technology, innumerable resources are now accessible to you as a trader that allow for better judgement calls to be made when trading. With tools such as stock screeners, trading bots and trading algorithms, one can make well-guided choices as to what trades to buy, hold or sell at any point in time. Many of these tools can be found for free: for example, Google’s stock screening software. Not only can these tools help you make profits, they can also cap the losses that you would have otherwise made.
Social trading is another online platform worth exploring as a beginner trader. This type of trading involves using user-generated financial content to make trading decisions. It also provides you with an online space on which you can gain and distill trading knowledge provided by more advanced traders and thus allows for you to learn more about trading faster.
At the end of the day, trading is one of the best ways to invest and diversify your income, even more so in oversea markets. You can now set off on this journey with your best foot forward. And remember: every step is a learning process.