When starting out in the online stock trading market, it’s understandable that you’ll want to jump in with both feet, but there’s a few things that you’ll want to take into account if you want to be a successful trader.

Stocks are shares in whichever business you’ve chosen to invest in, meaning you have partial ownership of a pre-determined portion of that company’s assets and earnings. This kind of trading is a great way to make a return on your investments, without having to own any underlying assets and with a wide variety of different ways to trade.

If you don’t want to come across as an amateur when you make your debut, be mindful of making the following mistakes:

1. Don’t skip the research stage

Although it may seem somewhat tedious, not spending enough time on the research part of your trading journey can lead to the biggest downfall. Jumping headfirst into online stock trading without doing your due diligence will cause you to make simple mistakes that could have been otherwise easily avoided.

As well as researching different trading platforms, you should also look into the companies that you’re wanting to invest in. This includes keeping up to date with external factors that might affect the price or value of these stocks, such as current world events or recessions.

To give you a helping hand, we recommend using an economic calendar which will pull all the important events together, and give you an idea of how your investments might be affected.

2. Don’t follow herd mentality

If you’re surrounded by fellow traders, or like to keep an eye on the trends, it can be easy to be influenced into trading the same way as everyone else, just in case their strategy might be better than yours. This is a very common mistake amongst first-time online stock traders.

With the market as volatile as ever, you are truly the best judge of how you should invest and go on to utilise your capital. If you’ve done the appropriate amount of research, then you should be able to trust your own trading strategy.

Once you’ve developed your own trading style, you should feel more comfortable with decided what type of assets you want to trade in. Trading in a wide variety of companies in your portfolio will show diversity, and ultimately lessen the risk involved.

Of course, you can consult with more experienced traders before you make your decisions but unless you actually agree with their recommendations, don’t make the trade purely based on this advice.

So, stick with what you know and trust your gut instincts. An overall method that you should follow, which is recommended by investments experts, is to invest in a stock for a minimum of five years in order to gain both knowledge of that asset and have the best chance of making a profit.

3. Don’t start trading with too much capital at once

You might think that because you’ve done your research, you can begin trading with all of your capital at once, but this is not the case. As a beginner in the online stock market, trading with too much money at one can trigger your demise.

To start you off, we recommend day trading, as this is a great way to make smaller investments due to safety features that control the risks to trader’s capital. Moreover, spreading your capital across many different stocks, as opposed to just one, will pose as less of a risk to your wallet.

With any type of investment, you need to have a significant portion of risk capital at your disposal, to safeguard you from an unsuspected drop in the market or world event.