7 Tips to Excel at Online Trading

0
27
7 Tips to Excel at Online Trading

How investors can excel in trading online and make profits buying and selling stocks, forex, cryptocurrencies and other financial markets.

Free book preview
Money-wise solo preneur

This book gives you the essential guide to easy-to-understand tips and strategies to achieve greater financial success.

April 16, 2021 4 min read

The opinions expressed by the entrepreneur’s contributors are their own.

What does it take to be good at trading online and making money buying and selling stocks, forex, cryptocurrencies and other financial markets on the internet?

1. Online trading vs. investing

Trading online is a short term, active way to make money. It differs from the long-term investment approach advocated by Warren Buffett. It is closer to how the famous “market magician” Paul Tudor Jones plays the market. Online trading is an amazing way to make independent income using the internet BUT it is not for everyone. Before investing your money and time trading online, the first thing to do is check that this is right for you.

Related: What You Need To Know Before You Start Trading Online

2. Find a good online trading app

Online trading can be done using your smartphone, tablet or desktop computer. It is important to find trading companies that offer an online trading platform that can be used on any of these devices. The online broker or bank should be regulated by a government agency from a reputable country such as FINMA in Switzerland or the FCA in the UK. Among the top online trading apps, trading costs are usually comparable, but you should make sure the commissions and bid / ask spreads are acceptable.

3. Take a free online trading course

There are many free online trading courses on the internet as well as paid options. There is no course in which you will learn everything you need to know about online trading. Most of these lessons come from experience. Learning concepts like lot size, pips, leverage and placing an order in trading doesn’t take long, but it is necessary to understand how online trading works. Ideally, choose a trading course that explains the different trading styles and trading strategies available.

Related: How to Start Investing

4. Choose a trading style

In general, you can be a day trader who does day trading, a swing trader who does swing trading, or a position trader who does position trading. You can further break this down into strategies like scalping. A scalper is aimed at very fast in and out trades in order to make gains or losses in the short term. How much time you can devote to trading plays a big role in the trading style you choose. If you have a few hours a day, you can trade on a daily basis. A few hours a week would be more suitable for swing or position trading styles.

5. Learn a trading strategy with risk management

The wheel doesn’t have to be reinvented. Find a reputable trading mentor or advisor who will explain some simple trading strategies. Over time, you will adapt the strategy to suit your own personality. Right from the start, it’s important to incorporate risk management to make sure you don’t risk too much on a trade. A simple strategy for buying and selling forex signals is easy to learn, but there is no way to control the size of the winning and losing trades. Harmonious trading is an example of an advanced trading strategy that includes trading risk management.

Related Topics: How To Diversify Investing: 4 Simple Tips To Get Started

6. Use a trading plan to set goals

All the best traders use a trading journal and set a trading plan. This plan can be taken from previously written trading plan templates. There are details such as how many trades to place per day, how much money you will be adding to your trading account, your financial year-end goal, etc. There is also a decision on which financial markets to choose for example, bare call options on tech -Shares. Having this trading plan on hand can help promote consistency in your trading.

7. Be persistent and maintain your trading discipline

It is this last point that separates the consistently profitable traders from the rest. Conditions in the financial markets vary, which means that your online trading results also vary. It is important not to change the trading strategy too quickly. Try to learn from your experiences and use your trading journal to do more of what resulted in winning trades and less of what resulted in losing trades. Whatever it takes to maintain your discipline, including some good R&R, is well worth it.