How to get prepared for trading so as to limit the risks involved?
1. We have to make sure we understand how online exchanges work: the money we deposit with any broker is not an investment: it does not accrue interest.
When we bring funds to a trading account and take a position on an asset, we choose a leverage, in other words, a multiplicator that will be applied to the initial and the current amount at any one time.
This inital amount and the rest of funds deposited can be lost completely if the market works against us and we cannot close our position whether automatically or manually for the lack of trading partners speculating in the opposite direction.
Even if the market returns to the initial prices, our funds may have been absorbed and lost for ever.
This means that we should deposit not more funds than we can easily afford to lose AND that we ought to read the broker's Terms and conditions to be sure that they will not demand additional funds to cover the total losses on a transaction.
2. We owe ourselves to make sure that the broker we work with is reputed, regulated and licensed at any one time.
If the conditions offered to us look suspicious, we should listen to our intutition and resist the temptation. What looks to good to be true is usually not true.
We have to do our homework and perform due diligence before making the next step.
3. Now that we have understood the risks involved in trading with possibly volatile assets, it is time to get familiar with the main market types and the techniques available for use.
N.B. Do not mistake options trading with Binary options!
Options trading is a special form of trading where your maximum risk is the price of the option (the option to exercise current market prices when you deem fit).* Binary options is just a gambling game like heads or tail. Avoid binary options.
*Regardless of the type of trading, inactivity and/or administrative fees may apply. They should be looked into before committing funds to any tading account with one's broker.!
Markets: Forex, Stocks, Commodities, Indices, FXOptions, ETFs. Bonds, Cryptocurrencies