When you first open your trading platform, the number of instruments available to trade can be a bit overwhelming. There is so much to choose from! Where do you start?
Even seasoned traders from other markets or investment tools might find all the CFD options, from commodities to equities to forex, quite a lot. However, there are some instruments and markets that are more suited for beginners than others.
The same rules for any capital market investment apply to forex: setting up a money management plan when trading is the best way to secure your investment going forward.
You want to stay within your comfort zone initially while you get your bearings. Practice makes perfect, they say, and that’s what demo accounts are for! Once you’re ready to take the plunge, here are some things to consider for your first investments.
The Classics Never Go Out of Style
Beginner traders are usually best off by sticking to the beaten path. There are certain instruments that are very popular, and that popularity is for a reason. Among currencies, those are EURUSD, GBPUSD, and USDJPY. These currencies pairs are the three most traded, and therefore the most likely to stick to market doctrine.
Of course, every investment comes with its risks And the whole point of trading is managing that risk!
That being said, the most popular currency pairs are the ones less likely to have sudden moves and to retain their liquidity during trading. They are also more likely to settle into trading patterns, with increased volatility during the times of day when there are more traders.
It’s Not Just Currencies
Orbex also offers other instruments aside from forex that are also a great way to get started. The S&P500 and the DJIA are considered the benchmark stock indices for the world, and are pretty consistent in their returns. For traders interested in taking a more long term position, investing in indices can be quite rewarding.
Naturally, index trading is slightly different from forex, because while currency markets tend to go up and down but keep their value; stock markets tend to go up over time. They are a good place to get some experience with trend trading, as well as a good hedging option while trading in other areas.
Commodities Are Not So Unusual
Commodities trading attracts a lot of traders because they have a potential of stacking up some substantial gains. But, often, people forget that one of the pre-eminent stores of value throughout history is also classed as a commodity: gold.
Beginner traders can get some experience handling the markets and reacting to economic news by trying their hand at trading gold CDFs. Of course, trading on a platform is different than buying gold to store value. However, the principles that move the price of gold are the same. Gold also tends to be resistant to price shocks and mirror the trading environment.
Beginners Bring New Ideas
Remember, it can be tempting at the beginning to jump in with both feet and use up your whole trading account. This is generally something that seasoned traders have learned to avoid. At the start, you want to get a feel of how the system works, how the market behaves and develop your own trading psychology.
Making money right away is fun and exciting, but gaining experience and learning from initial mistakes is what will most likely lead to long term success.
The markets listed previously give you the opportunity to explore the varied options available and see where, how, why and when your trading ideas work out. Sticking with the crowd by staying with the markets that are most traded and have the most articles written about, will help develop your experience and build confidence as a trader. Then, it’s time to explore what else the markets have to offer!