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Digital technology has made the ability to trade on financial markets more accessible – and more attractive to young people.
Some youngsters go into online trading to supplement a stable income, while others have ambitions to turn it into a viable career path. The World Economic Forum (WEF) says there has been an increase in young people globally taking up online trading, with 70% of retail investors under the age of 45.
Roger Eskinazi, Managing Partner at Tickmill, says the greatest advantage of starting online trading at a younger age is being able to take advantage of compound interest and long-term growth potential.
“Individuals who start online trading at 18 will be able to build their portfolios and learn valuable lessons about how financial markets work along the way.”
However, Eskinazi says young people must think of online trading as a ‘get-rich-quick’ scheme. He says there are opportunities to make profit, but one needs to invest time and concentration into it. Sound decision-making is also vital, he adds.
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He warns young people not to approach online trading with a gambling mentality. To become successful and build a futureproof investment portfolio requires discipline, patience and perseverance. These principles will help manage both the gains and losses responsibly.
With financial markets being volatile, online trading also requires someone who is willing to learn. As major political or social events trigger fluctuations in the markets, there is less stability when compared to other industries.
He says 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.” Successful traders must learn to strike a balance between the two.
To reduce the risk, traders must do extensive research to make well-informed decisions.
He says creating a trading plan and sticking to it will help. Human beings are prone to emotions like fear and greed. “Making emotional, impulsive decisions is one of the biggest pitfalls that traders need to overcome.” A trading plan will provide a clear outline of objectives and strategies for managing risk.
He is of the view that most young people are attracted to trading because the digital age has made it simpler, accessible and smarter. Those who have an understanding of how to use the technology to supplement their personal skills will have the biggest advantage.
He advises starting with a demo account, so traders can test online trading skills without any risk. This will allow you to practice trading in a simulated environment, using virtual money, which replicates real market conditions.
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