Today, the Internet has made it possible for anybody to trade on the world stock exchanges and the forex markets, but that doesn’t mean online trading is something that you should enter into lightly. It’s a complex business and, as every seasoned trader knows, acquiring the skills and discovering a winning formula takes time and effort. But, if you do your research and get to grips with the fundamentals, it’s surprising just how fast you can become a competent trader.
Who knows? With dedication, you could even become a full-time trader.
1. The tools of the trade
The first step on the path to being a successful online trader is to learn the basics – without losing money. Fortunately, most online trading platforms offer mock trading trials and simulators where you can experiment, get a feel for trading and discover whether or not it’s for you.
Once you’ve got to grips with the basics of online trading, the next step is to acquire the tools you need to take your trading skills to the next level – before you start buying and selling for real. Again, there are plenty of sites out there to help, such as CMC markets, which offers platform trading tools, dealing with CFD, binary and Forex trading. With tools, guides and even webinars all designed to help you hone your trading skills and identify those all-important trends behind successful trading, tools such as these are essential if you are serious about online trading.
2. Accept that you aren’t going to become Warren Buffet overnight
No matter what anyone tells you, playing the markets is not a quick route to riches. You have to be in it for the long term. The markets go down as well as up and, just as with any form of speculation, you shouldn’t don’t risk cash you can’t afford to lose.
For many, this means starting out small. While there are platforms like The Share Centre that will allow you to trade in amounts as small as £7.50, it’s a good idea to make sure you have enough capital for at least several months of trading. It’s unrealistic to expect to be successful immediately and transform a £20 pot into a million quid. A much better strategy is to develop a trading plan and save your money towards a solid fund of several thousand pounds, while learning the basics and honing your game through mock trading and simulators.
3. Learn the art of discipline
Just as important as learning the fundamentals of online trading is learning the art of discipline. This is at the core of any successful trading strategy. Be consistent, do your research, use stop losses and don’t be tempted by gut instinct even though that gut instinct will be proved correct from time to time.
Successful trading is a combination of experience, analysis and informed timing. Your early mistakes in the world of trading should tell you this and help you formulate a strategy that works. Develop a plan based on your experience and experimentation stick with it. Don’t succumb to short-term fear. Online trading is not a short-term thing. Be patient and persevere for long-term rewards.
4. Expand your skills and knowledge
Even as you become more successful, you shouldn’t rest on your laurels. Never stop learning. Online trading is a hugely complex subject. Choose the niche that suits you best, whether that’s Scaler, Day or Swing trader and become an expert in what you do best. For example, do you favour fundamental analysis or technical analysis? Discover the trading styles that you excel at and delve deeper. Read books and industry publications, listen to the experts and look for new sources of information and inspiration.
At the same time, while you might have your own trading strategies, always diversify. Online trading, no matter how good you are at it, is notoriously unreliable. Don’t put your eggs all in one basket. Instead, distribute your capital among a wide choice of commodities.
Online trading demands time, energy, commitment and, of course, hard-earned cash from your day job. However, for those that can invest all of these and learn the skills of the trade, the rewards can be great.