Here’s how beginner online traders can learn to make sense of market trends

Photo: Executium/Unsplash
Photo: Executium/Unsplash

Looking to dip a toe in the world of trading like so many others during the past two years? As unpredictable as it is, it’s even riskier to dive in without knowing the fundamentals. We hit up the experts behind the Binomo app to find out some basic rules for understanding market trends. 

Know the external factors that can influence the market

Things like politics can shape trends in the market, and economic policies are embedded in the agenda of whichever administration is in charge. For example, policies that stimulate economic growth are the proverbial milkshake that brings the boys to the yard. The boys in question are, of course, the investors looking to park capital where it will garner the highest returns. 

And it’s not just taking note of what’s going on with your country’s politics either. It’s important to look at international transactions as well, since the flow of funds between countries affects the strength of a country’s economy and its currency. The more resources that flow into a country (if they have a larger export), the more can then be reinvested, which will stimulate the financial markets within those countries.

Another thing you’ll definitely wanna do is to always keep rotations in mind. Funds run after gains in certain sectors until a rally there becomes exhausted, and then funds run to other sectors. It’s likely that investors will rotate into different sectors.

Photo: Jamie Street/Unsplash

Do your due diligence

The same way you’d religiously check the oven from time to time when you’ve got a beautiful sourdough baking (while muttering ‘my precious’ under your breath) is the same way you’d wanna treat your shares. It’s important to regularly check in on those share lists (also known as asset lists), so the phrase “I’m toast” won’t be in your vernacular. Always do your own research and run all the assets you’re tracking through a buying checklist. Asset lists are a great resource to find the best growth assets to buy and watch, and it’s as easy as downloading an app, or setting a share list website as your browser homepage. 

Checking on your shares is one thing, but you’ll need to check in with yourself as well. Staying level-headed is key, as the only constant here is change. It’s easy to want to throw your sandwich to the ground when a share dips, but that dip may be temporary — but you’d lose a good sandwich forever. Volatility is part and parcel of investing, prices go up and then they go down, and there’s really a certain level of uncertainty to get used to, so it’s important to avoid the temptation to over-focus on the short term. 

That said, it’s also important to make sure to take on an amount of risk you’re comfortable with. Different assets come with different levels of risk and volatility of the market, and it’s up to you to decide how much risk you can afford to take. A good rule of thumb is to invest an amount that you’re comfortable with losing. 

Photo: Maxim Hopman/Unsplash

Get used to the trends

It’ll take time, but maybe familiarizing yourself with the process can help you to feel more confident, and mobile app Binomo wants to help. The trading platform has lots of resources to help beginners navigate the world of online trading. For starters, when you sign up you get $1,000 in virtual currency to trade from a demo account, and they’ve got a whole bunch of other ways to prep newbies to get used to these market trends. You can get your hands on any of the free education materials, and there’s even a help center if you get stuck. Now that you have a fundamental understanding of the factors that shape market trends, it’ll be easier to gain insight on how future trends may occur. 

Ready to dip a toe into the world of trading? Head over to their website for more information, and do keep in mind that financial operations may involve risk. Before you invest in any financial product, it’s important to understand that all investments carry a risk of financial loss. This is true for any financial product traded on an open market, but training on a demo account first can help. 

Coconuts Media is not a financial company and doesn’t give financial advice. This article is a collaboration with Binomo and is meant for educational purposes only.

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