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Trading tips for beginners in 2022

7th April 2022 Print

Trading is difficult for many different reasons today. It often seems like an easy way to make money, but entering into the world of trading with this attitude can often cause trouble. This is why beginners need to look into how trading works in a much deeper manner. To help traders get into the world of trading smoothly, we’ve put together our top tips to help with trading. 

Don’t dive headfirst into crypto

Crypto might look like a way to make millions from pennies, but it’s much more complex than that. While there were a lot of explosions in crypto near the start of the blockchain revolution, the market has calmed down significantly since then. In order to trade in the crypto market, research has to be carried out rather than just pumping all of your funds into the biggest crypto you can see. So, when it comes to crypto, our top trading suggestion for 2022 is to fully research what the different coins have to offer.

There are some coins out there that offer a return on the initial investment via staking. This means that you can increase the amount of that coin that you hold over time. For example, if you bought 100 coins worth of a particular crypto and it had a 3% yield, you would end the year with 103 coins. Imagine you bought them for £1 each. This would mean that even if the price stayed the same, you would still have made a £3 profit. Of course, if the price increases as well then it increases your profit even more. 

There are also other coins that plan to offer additional services over the next few years. If you are able to invest before these services go live, then you will have a better chance of getting in before the price increases significantly. Of course, just like any investment, there is an element of risk involved, but if you do the right research, you can limit this risk somewhat.

Look for strong businesses

If you’re just starting out with trading, you don’t really want to be looking at high risk trades in general. Your lack of experience in the market will make it hard for you to spot where value might be located, and it will ensure that you are more likely to lose your money in the long run. By looking for businesses that have a track record of providing profits and good services, you will achieve a more stable investment. 

Businesses such as car insurance, power companies and established tech companies will all have a better chance of providing a better return for you in the long run. It does mean that it can sometimes mean waiting a while for any return to take place though. So, if you’re in it for short-term profits and to get rich quick, investing is most likely not the way for you to do it. This is why it is best for beginners to go in with an open mind and understand that long term is the most solid investment for people just starting out.

Look for investments that pay a dividend

Getting a dividend is one of the best ways to get a return on your investment. If you invest in a company that pays out dividends, then you will receive regular payments from that company based on their performance. Some pay them out quarterly, some pay them every six months and some pay them yearly. However the dividends are paid, it is an additional payment that doesn’t diminish from your initial investment.

This means that you will get this payment and that you will still hold the full amount of stock that you bought. This is why it’s always good to look for companies that offer a good dividend yield. Calculating your dividend yield will allow you to do a number of things. Firstly, you can decide if you want to use the dividend payment as a form of additional income. This will help to make your life a little bit more comfortable, although unless you have made a significant investment, it’s not likely that the dividend will be a huge amount. 

Secondly, you may want to reinvest your dividend. This will allow you to hold more shares in that company and therefore increase your dividend payment. You may even want to invest in other companies that pay dividends. This is a good way to increase your portfolio without diverting extra money from your regular income.