How to improve your trading with a financial advisor

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Financial trading can be a complex and, for the uninitiated, a confusing activity. While there is clear potential for substantial profits to be made, there is also an ever-present element of risk. The best way to reduce this risk is through experience, specialised knowledge and self-discipline, but obviously it takes time and effort to develop these qualities.

Looked at this way, the path to successful financial trading can seem like a catch-22 situation. You need experience in order to trade profitably, but the only way to acquire that experience is to begin trading regardless. How can the beginner gain necessary experience and learn the ropes without losing money regularly? The answer is to take on a financial advisor.

What does a financial advisor do?

A financial advisor helps you to make decisions about what to do with your money. This may include trading advice, but their services are not necessarily limited to this one area. A financial advisor gives you the benefit of their knowledge and expertise in helping you to put together a personalised financial plan that may cover the next year, the next decade, or the rest of your life.

This plan may cover personal budgeting, managing your savings, and handling tax and insurance, as well as looking after your investments. They should help you to understand your financial health and to set goals for the future. In terms of trading strategies, they will assist in establishing your level of risk tolerance, and will advise you accordingly.

Choosing the right advisor for you

In terms of day-to-day trading, there are several paths you could go down. For instance, many beginners on the financial markets opt for fully managed forex accounts where a financial advisor or a professional fund manager makes investments on your behalf in return for a fee or a percentage of your profits. Obviously, this requires a huge level of trust on your part, as you are handing over decisions about your money to another party, but the advantage is that you save time and aren’t hampered by emotional involvement or lack of experience.

However, trading with a managed account won’t let you develop the skills or experience that will make you a better trader. With an actual financial advisor, you remain in control, and you can ask them questions to broaden your understanding of the market, and also to make sure that they are acting according to your wishes. It’s always best to know how and why your money is being invested.

Become a better trader

More experienced traders can also benefit from engaging a financial advisor. If you’re consistently losing money on your trades and investments, an experienced and impartial outside advisor may be able to tell you what you’re doing wrong. They can also assist you in rebalancing your portfolio of investments, assisting with asset allocation and keeping you up to date on tax and other legal requirements.

Working with a financial advisor can help you become a better trader. You get the benefit of their experience and a third-party perspective on your strategies and habits. Whether you work with them long term or in a one-off session, using a financial advisor is definitely worth considering.

        

  

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About Editorial Team 86 Articles
Watch My Wallet has everything you need to know about money, written by real people who’ve been there. Inspired by the philosophy of Early Retirement Extreme (ERE), our goal is to make informed decisions about our finances in order to achieve financial independence.