The ability to trade on financial markets was previously only available to a few individuals who had the technical expertise and specialist knowledge needed to succeed. Digital technology has, however, changed the game, making it more possible for people with any level of experience to become active participants. Online trading platforms have led this charge and attracted widespread interest from young, aspiring investors.
The millennial and Gen-Z generations are coming of age and looking for ways to leverage their skills as digital natives and make money through trading. For some of these individuals, trading online is a supplement to earning a stable income, while others have bigger ambitions to turn it into a viable career path. Equipped with the right information, resources and tools, both these ambitions are highly achievable.
“Encouragingly, an increasingly number of young people are opting into the online trading world – according to the World Economic Forum, 70% of retail investors are now under the age of 45. One of the greatest advantages that young people have over their older counterparts is time – by starting at an early age, they can tap into the power of compound interest and long-term growth potential.
Most online trading platforms, allow users from the age of 18 to open accounts, build their portfolios, and hopefully learn some valuable lessons about how financial markets work along the way,” says Roger Eskinazi, Managing Partner at Tickmill.
To get young online investors off to the best start, he offers the following words of advice:
Online trading is not a ‘get-rich-quick’ scheme
Trading online presents many opportunities to realise a profit, but making that profit isn’t a sure thing. Becoming successful requires a significant and consistent investment of time, concentration and sound decision-making.
“It’s definitely not something to approach with a gambling mentality. Building the most sustainable and futureproof investment portfolio requires discipline, patience and perseverance – these principles will help you manage both gains and losses responsibly.
When you enter the market, always take a long-term perspective that aligns with what you want for your future, rather than falling into the trap of short-term thinking,” says Eskinazi.
The most successful traders are always learning
Financial markets can be very volatile – a major political or social event can trigger big fluctuations and developments. Therefore, unlike other industries which enjoy a larger degree of stability, online trading is highly dynamic and requires an ‘always-on attitude,’ that leans on the value of ongoing learning.
It’s important to develop a hunger for education – listen to podcasts, compare different investors’ opinions, read articles, keep abreast of current affairs, and stay informed. Learning is the best way to develop resilience, which is key in times of volatility.
Every reward comes with a degree of risk
There is no investment scheme that can realistically promise big reward without a high level of risk. The interplay between risk and reward is in fact one of the most central pillars of the investment world – learning to strike the perfect balance between the two is the hallmark of successful traders.
Every investor has a risk appetite – some are highly risk averse while others are more prone to taking risks. The way a trading plan is constructed, relies heavily on factoring in this risk tolerance, along with other important factors such as your financial goals and the time horizon.
Never trade without doing the research
Long-term profitability in online trading depends on so much more than making gut decisions – it’s vital to conduct extensive research in order to make well-informed decisions.
Create a trading plan – and stick to it
As astute as any investor may be, by virtue of simply being human, they are prone to emotions like fear and greed. Making emotional, impulsive decisions is one of the biggest pitfalls that traders need to overcome.
“To safeguard against these hurdles, investors need to create a trading plan, that clearly outlines their objectives, strategies for managing and mitigating risk, your short- and long-term financial goals, and the asset classes that will work for you. Sticking to this plan, especially when markets are tough, will help you avoid the trap of impulsivity,” says Eskinazi.
Get the tech in your corner
Trading in the digital age is simpler, more accessible, and smarter than it has ever been. Young people, who have an intuitive understanding of how to use technology to supplement their personal skillsets and abilities, are in the best position to use the available tools to their advantage.
Algorithmic or AI trading, which uses AI to sidestep the complexities of coding and build strategies using AI, is a brilliant example. Many of the leading platforms, have invested in these tech-driven tools to help newcomers gain a footing in the industry.
Start with a demo account
The best way to try out your newfound online trading skills without any degree of risk, is to start with a demo account. This will allow you to practice trading in a simulated environment using virtual money, replicating real market conditions without risking your own money.
This hands-on experience is essential for building a solid foundation before transitioning to live trading with real money, ensuring that you're well-prepared to handle all the challenges and opportunities of financial markets.
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