Ready To Start Online Trading? Here's How You Can Make It Work
For the most part, you just need a smartphone to do your trading.
This article is written for the moms and dads who dream of becoming traders, but do not have the time or the patience to know where to start.
So, where do you begin your journey as a trader? You’ve done your homework, you’ve looked around, and now you’re ready to start your journey to financial independence as a trader. Since you are full of dreams and expectations, but new to this arena, how do you start?
Such a question is not easy to answer, because your pride often makes it more difficult to ask around, and get answers from friends and colleagues.
But please, do not be afraid! I am here to help you find your compass bearing, and sail directly towards you realizing your ambitions.
What tools do I need to start my new career?
For the most part, you just need a smartphone to do your trading.
However, I would suggest a decent laptop since you might be moving around. You may also want to conduct plenty of research and analysis while remembering to always take notes. A computer will not just be useful; it is essential.
Another critical thing to remember is that without access to the internet, you are not an online trader. You will have to do laborious operations such as calling your broker via phone to place orders, which can be problematic. Also, note that several brokers are simply refusing to accept calls in today’s online-centric day and age.
What should I trade?
The next step is to decide what you will trade. As an introductory forewarning, some asset classes like cryptocurrencies can change by more than 15% in a single day. Products such as oil, currencies and stocks can all also experience wild gyrations very suddenly, especially as a result of emerging economic or political news.
The volatility, the up and down movements of various asset classes, will influence your trading style, and, of course, there are more complicated products out there to be discovered after your initiation, including financial derivatives such as futures and options.
Finding a reputable broker?
Seeking out a reputable (and reliable) broker is vital, and so, regulation, reputation, and best-in-class services are the crucial aspects to look out for. Still, the extent and scope of client support should also be an important consideration for novice traders, because of the volume of questions that are likely to arise when setting forth in search of a career in trading.
Another noteworthy point is your prospective broker’s complaints procedure and data retention capability. Since your broker will execute your trades and hold your private data for several years, it is imperative to do the required due diligence into your broker’s regulatory record, company stature, and possibly most importantly, capital adequacy posture with its liquidity providers.
So, how do you find the right broker for you?
The answer is simple: you go to Google.com and search for “how do I trade forex,” or “trading stocks,” or input a combination of other trading-related terms- the final outcome will be the same.
An entire kaleidoscope of brokers will appear, and the challenge will be on for you to tick all the boxes in ensuring your chosen broker matches all the required criteria, and much more. Choosing is harder than it looks.
Regulation, reputation, and best-in-class services are the primary considerations, and make sure you pick up the phone and speak directly to several representatives before committing to opening an account. Ask where the broker is regulated (and check). Do not be apprehensive about engaging your prospective broker through online chat, and call your nearest rep office to ask where they are and whether you can stop by for a visit. Visit.
After you find your broker, what’s next?
Learning the ropes is an essential part of becoming a successful trader. You will need to educate yourself one way (the easy way) or another (the hard way). The easy way is learning and making mistakes on a simulator and/or with very small slices of capital. The hard way is overcooking your market entry, and burning out your entire financial livelihood in pursuit of pips and profits.
If you decide to take the technical analysis route, you should practice applying technical analysis, or in other words, studying past price action and using pattern recognition to develop a trading strategy.
If you choose the fundamental analysis route, or what’s alternatively known as “trading the news,” you should familiarize yourself with macroeconomic developments and economics in general.
If you opt for probably the toughest of all routes and attempt to become a high-frequency trader (HFT), you will need to learn how to code macros, functions, and algos as part of your trading strategy.
How do I educate myself?
The simple answer is that trading education is obtained in the same way all other education is: via direct coaching, a course, a webinar, YouTube, reading a book, or, via self-taught trial and error. Bear in mind that in modern times, you’re able to join a trading group or obtain direct mentoring from someone who already trades.
Nowadays, you can check what other traders are doing, and how they’re performing as part of “social trading” with the ability to copy the decisions of illustrious trading celebrities such as Warren Buffet and Elon Musk. Since their trades are public information, anyone can tune in and replicate the same asset purchases in real-time.
What kind of risk should I take?
When it comes to trading, risk management is paramount. Prudent traders should never overstep their bounds and cross the rubicon into gambling because this necessarily means probabilities being stacked against you. If you have a risk-on attitude, the more frequently you trade, the closer you will be to losing your entire capital base.
Popular new instruments such as CFDs or futures use leverage. In other words, a multiplier that magnifies a trader’s capital base by as much as 500 times, in which case, even a small change in the underlying asset price can lead to significant losses. Moreover, sudden price tilts can leave traders owing money to the broker if their account goes into negative territory- a distinct possibility when market “gaps” appear during low liquidity periods such as weekends.
Novice traders are therefore advised to consider appropriate “stop out” levels when trading. In other words, what proportion of your capital base are you willing to risk in any one trade.
For products with 1:1 leverage, you must learn and understand the factors behind daily movements. With stocks, key announcements such as financial performance figures and management changes influence the market price on a daily basis.
If you decide to trade cryptos, one of the most volatile financial products in history, your capital is at even greater risk. Combining leverage with cryptocurrencies simply raises the stakes and magnifies the already large potential for a large profit- or loss.
A word of warning: if you combine leverage with crypto products, you could end up losing your entire investment in the blink of an eye. Conversely, if you back the right asset at the right time, you could haul in an exorbitant sum of money. Both the choice and the risks are yours to bear.
If it is the thrill you are seeking, you have found the right place in trading. Much like white water rafting, be aware of the risks and familiarize yourself with the instructions, as set out by seasoned professionals. Build up your experience at a gradual pace, and wear your safety gear at all times, but prepare for an exhilarating yet risky endeavor.
Set targets and work according to a plan which you execute like a professional. Follow the process, not the result. Win that car, buy that house, and travel the world. Take control and become the leader and commander of self that you deserve to be.
Remember: trading necessarily involves risk and the potential for losing your capital, so only invest what you can afford to lose. Not a penny more.