Trading or investing in the financial markets used to be an expensive business, with the average commission per trade going as high as $45 in the late 1980s. Market traders and participators used to consist mainly of high net-worth individuals, investment firms and large institutions. Today, anyone can try their hand at trading, and many savvy traders actually begin trading pretty young!
The situation has improved a lot with the digital revolution, yet you will still hear some people complain that the “Markets have changed” or are no longer “as good as they used to be”. The truth is, for private investors with smaller accounts, the access to opportunities in the markets has never been so good. If you have been thinking of picking up trading there is no better time to start, and here’s why:
Cheaper Commissions and Fees
Nowadays, commissions are much, much lower, which means the cost of trading has decreased as well. This is very important as trading is all about managing risk. If commissions are too high, it becomes almost impossible for traders with a small account size to be profitable.
In many cases, it’s free to open an account with a broker, as well as to deposit and withdraw your funds. It’s totally possible these days to trade with as little as a few hundred dollars and be profitable, particularly in the forex markets.
Access to Margin
Many brokers will offer you margin, which can be used to increase your market exposure, with only a small deposit required. You will find this particularly for leveraged products like CFD (contracts for difference).
Now, of course, there are some risks involved with using margin as well as benefits. You need to know beforehand what you are prepared to lose on any given trade or investment, and make sure you have a protective stop-loss in place for that. Never put yourself in a situation where it’s possible to blow up your account, go broke, or worse yet, get into debt.
The amount of high-quality educational material available for traders out there is not only huge, but also easily accessible! Resources catering to various experience levels can be accessed on free websites and blogs, through books from Amazon or the nearest library, and even professional courses if you so choose.
Once you establish a particular trading style you like, you can look for professional traders online with a similar style and follow them on Twitter, read content from their website, or buy their books. This can dramatically reduce your learning curve.
Trading Tools & Research
You can gain access to advanced trading tools and platforms just by opening an account with a broker. This includes professional charts with different indicators, screening tools and real-time prices.
Many brokerage firms also offer support to young investors that are finding their feet. Frank by OCBC, for example, runs a Young Investors Programme. The programme not only provides participants with a young investors account but also organises a series of workshops that equips them with investment strategies.
There are also countless different websites where you can find all the latest fundamental information and news you need to research stocks, currencies, indices, bonds and more.
So, it’s true…
There has never been a better time to trade and learn about the markets, and to all those who believe the markets have changed for the worse, I leave you with this quote from legendary trader Ed Seykoter –
“The markets are the same now as they were five to ten years ago because they keep changing – just like they did then.”
Therefore, don’t be afraid to give trading a try!