The Australian stock market, which goes by the nickname ASX, is one of the world’s premier markets, with around 58% of the nation’s population investing in it and holding Australian shares! Investing and trading is a great way to make some extra money once you understand the ins and outs of the game.
Anyone can trade shares in Australia, and it doesn’t take huge amounts of money to get started, in fact, it’s best to start small and learn the ropes before you make any really big investments, and even then you must make sure to stay within your pre-determined limits. While trades go well more often than not, it is a game at heart and there are risks- when you lose, you lose real money, and if you can’t afford to do that you had best not overplay your cards!
To get things started, say that you only have a limited amount of capital to begin your trading process with. The first thing you should do is develop a strategy for your savings that will carefully build your portfolio up until you are holding around five stocks, then you can work toward increasing the shares you hold in each of those stocks. If you decide it’s best to sell one of your stocks, we highly recommend that you take the opportunity to reinvest the sale’s capital directly into another one of your stocks, and use any accumulated savings to increase the amount that you purchase! Using this system, the amount of cash that you have invested in a stock, which is called your “position size” will grow instead of just the number of stocks you own, which is a great way to minimize risks while eventually maximizing your profits!
Unfortunately, it is all too often our human nature to want to rush into things headlong before we really understand all the attendant subtleties surrounding what we hope to achieve, which can sadly lead to disaster! People smell the money and think they can get a quick fix by using high-risk day trading to help them make their long-term goals a reality, but by giving into short-term gratification they are flirting with disaster. It’s a tragic truth that a great many people have lost their shirts along with their capital in futile attempts to implement dodgy get-rich-quick strategies on the stock market, and end up being a statistic instead of a success story.
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When it comes to trading stocks one must be patient and learn about the possible pitfalls so that they can avoid them! You need to to be able to walk before you can run, and even then it’s slow and steady that wins the race! By adopting a thoughtful and careful pace you will find that your trades are a lot safer and much less stressful in terms of security, meaning the amount of overall risk you are willing to take, and the financial rewards may come more slowly, but they do come, and you end up being in the winner’s circle!
So, be sure to trade wisely with the long haul in mind, and be patient- that way lies prosperity!
