How To Start Trading Online
you can embark on learning trading, starting with these five basic steps…
( Sorry if it seems we’re stating the obvious. ) Find a good online stock broker and open a stock brokerage account. Even if you already have a personal account, it’s not a bad idea to keep a professional trading account separate. Become familiar with the account interface and take advantage of the free trading tools and research offered exclusively to clients. A number of brokers offer virtual trading (more on that in step five).
2. Learn to Read: A Market Crash Course
Financial articles. Stock market books. Website tutorials. There’s a wealth of information out there, much of it inexpensive to tap. And don’t focus too narrowly on one single aspect of the trading. Instead, study everything market-wise, including ideas and concepts you don’t feel are particularly relevant at this time. Trading launches a journey that often winds up at a destination not anticipated at the starting line. Your broad and detailed market background will come in handy over and over again, even if you think you know exactly where you’re going right now.
Start to follow the market every day in your spare time. Get up early and read about overnight price action on foreign markets. (U.S. traders didn’t have to monitor global markets a couple of decades ago, but that’s all changed due to the rapid growth of electronic trading and derivative instruments that link equity, forex and bond markets around the world.)… News sites such as Google Finance serve as a great resource for new investors.
3. Learn to Analyze
Study the basics of technical analysis and look at price charts, thousands of them, in all time frames. You may think fundamental analysis offers a better path to profits because it tracks growth curves and revenue streams, but traders live and die by price action that diverges sharply from underlying fundamentals. Do not stop reading company spreadsheets, because they offer a trading edge over those who ignore them. However, they won’t help you survive your first year as a trader.
Your experience with charts and technical analysis now brings you into the magical realm of price prediction. Theoretically, securities can only go higher or lower, encouraging a long-side trade or a short sale. In reality, prices can do many other things, including chopping sideways for weeks at a time or whipsawing violently in both directions, shaking out buyers and sellers.
The time horizon becomes extremely important at this juncture. Financial markets grind out trends and trading ranges with fractal properties that generate independent price movements at short-term, intermediate-term and long-term intervals. This means a security or index can carve out a long-term uptrend, intermediate downtrend and a short-term trading range, all at the same time.
Rather than complicate prediction, most trading opportunities will unfold through interactions between these time intervals. Buying the dip offers a classic example, with traders jumping into a strong uptrend when it sells off in a lower period. The best way to examine this three-dimensional playing field is to look at each security in three time frames, starting with 60-minute, daily and weekly charts.
It’s now time to get your feet wet without giving up your trading stake. Virtual trading, offers a perfect solution, allowing the neophyte to follow real-time market actions, making buying and selling decisions that form the outline of a theoretical performance record. It usually involves the use of a stock market simulator that has the look and feel of an actual stock exchange’s performance. Make lots of trades, using different holding periods and strategies, and then analyze the results for obvious flaws.
So, when do you make the switch and start trading with real money? There’s no perfect answer because simulated trading carries a flaw that’s likely to show up whenever you start to trade for real, even if your paper results look perfect. Traders need to co-exist peacefully with the twin emotions of greed and fear. Virtual trading doesn’t engage these emotions, which can only be experienced by actual profit and loss.
5. Other Ways to Learn and Practice Trading
While experience is a fine teacher, don’t forget about additional education as you proceed on your trading career. Whether online or in person, classes can be beneficial, and you can find them at levels ranging from novice (with advice on how to analyze the aforementioned analytic charts, for example) to pro. More specialized seminars – often conducted by a professional trader – can provide valuable insight into the overall market and specific investment strategies; most focus on a specific type of asset, a particular aspect of the market, or a trading technique. Some may be academic, and others more like workshops in which you actively take positions, test out entry and exit strategies, and other exercises (often with a simulator).
Manage and Prosper… Once up and running with real money, you need to address position and risk management. Each position carries a holding period and technical parameters that favor profit and loss targets, requiring your timely exit when reached. Now consider the mental and logistical demands when you’re holding three to five positions at a time, with some moving in your favor while others charge in the opposite direction. Fortunately, there’s plenty of time to learn all aspects of trade management, as long as you don’t overwhelm yourself with too much information.
If you haven’t done so already, now is the time to start a daily journal that documents all of your trades, including the reasons for taking risk, as well as the holding periods and final profit or loss numbers. This diary of events and observations sets the foundation for a trading edge that will end your novice status and let you to take money out of the market on a consistent basis. Start your trading journey with a deep education on the financial markets, and then read charts and watch price actions, building strategies based on your observations. Test these strategies with FREE Demo Account, while analyzing results and making continuous adjustments. Then complete the first leg of your journey with monetary risk that forces you to address trade management and market psychology issues.
How To Make Money In Online Stock Trading?
… Investing in the stock market can be a great way to have your money make money… Stock trading is not a risk-free activity, and some losses are inevitable. However, with substantial research and investments in the right companies, stock trading can potentially be very profitable…
Buy your first stocks. When you are ready, take the plunge and buy a small number of reliable stocks. The exact number will depend on your budget, but shoot for at least two… Companies that are well-known and have established trading histories and good reputations are generally the most stable stocks and a good place to start.
Begin trading small and use an amount of cash you are prepared to lose… It is reasonable for an investor to begin trading with as little as $1,000. You just have to be careful to avoid large transaction fees, as these can easily eat up your gains when you have a small account balance. Monitor the markets daily. Remember the cardinal rule in stock trading is to buy low and sell high. If your stock value has increased significantly, you may want to evaluate whether you should sell the stock and reinvest the profits in other stocks.
Consider also investing in mutual funds. Mutual funds are actively managed by a professional fund manager and include a combination of stocks. These will be diversified with investments in such sectors as technology, retail, financial, energy or foreign companies.
How To Start Commodity Trading
Keep in mind that before you begin trading commodities online, choose your trades wisely and avoid overtrading. If you find yourself placing many trades, and the results are not profitable, it is likely that you are overtrading. One of the greatest downfalls of many commodity traders is not being selective and doing too many trades.
More Advice for the New Online Commodities Trader… As with any new venture, you must do your homework and understand the ins and outs of the markets you decide to trade. When it comes to commodities, there are so many important factors to consider. First, remember that futures and options markets are derivatives of the actual market for the physical delivery of the commodity in question.
Therefore, it is important to learn all you can about the underlying supply and demand fundamentals for that asset. There is a wealth of information available for free from the commodity exchanges as well as from a variety of trade organizations and government agencies that supply commodity data free of charge. In the energy markets, the API and EIA are excellent sources of information. In grains, soft commodity, and animal protein markets, the U.S. Department of Agriculture issues weekly and monthly reports that include invaluable data and analysis.
Understanding commodities will require particular attention to supply and demand or fundamental analysis. At the same time, the futures and options markets in commodities are laden with risk. There is a tremendous amount of leverage in these instruments. While the opportunity exists to make huge gains, where there is the potential for rewards there are also commensurate risks.
Trading futures requires a good-faith deposit or margin. In many cases a trader, speculator, or investor can control vast amounts of a commodity and bet that the price is going higher or lower with a 5–10% margin deposit or less. However, given the gearing of these contracts and the volatility of the markets, margin calls requiring additional capital are likely. When it comes to options, buyers have time value risk, and sellers act as insurance companies, they risk a lot for small potential profits.
Exercise caution in the commodity markets, do your homework, and approach these volatile instruments with care and trepidation. While fortunes can come from commodities trading, the potential for losses is just as great. Online trading has increased the speed and efficiency of execution. Remember to approach online trading as a business with discipline and be precise.
The most successful traders are masters of efficiency. Mastering online trading requires a level of expertise that comes from hard work and study. Most online trading platforms have many resources for their customers. Make sure you use all of the information that is at your disposal. The platforms want you to succeed because a successful customer is one who will be in the markets and trading for the long haul.
How to Deal With a Stock Market Correction?
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How to Control the Magnitude of Market Corrections You Experience…
You can control the magnitude of the market corrections you might experience by carefully selecting the mix of investments you own.
First: Understand the level of investment risk associated with an investment. For example, in an investment with what I call a Level 5 risk (high risk), there is the potential you will lose all of your money. With a Level 4 risk, you might experience a drop of 30-50 percent, but you won’t lose it all. That’s a big difference in risk.
Second: Understand how to mix these different types of investments to reduce the risk to your portfolio as a whole. This is a process called asset allocation.
It’s important to reduce your exposure to significant market corrections as you near retirement. And once retired, you need to structure your investments so when market corrections occur, you are not forced to sell market-related investments. Instead, you use the safer portion of your portfolio to support spending needs during these times.
Third: Understand the risk-return relationship of investing. The potential for higher returns always comes with additional risk. The higher and faster the price of the stock market rises, the less the potential for future high returns. Just after a stock market correction, or bear market, the potential for future high returns in the market is greater. In 2017, cryptocurrency became the craze. It had a return of more than 1,000 percent in the year and retail investors scrambled to get in while professional traders stayed away. Why? Because the professionals know that when something goes up that much, it will eventually have a severe correction.
The last thing to know: If you don’t want the potential to experience a market correction, it is probably best to avoid investing in the market altogether. Instead, stick with safe investments. But safe investments have what we call opportunity cost—you miss the opportunity to set yourself up for the future life you envision for yourself and your family. The key is to strike a good balance.
How to Become a Professional Trader
You want to become a professional trader? Before you start, it’s worth thinking about exactly who or what a professional trader is. Most people think a professional trader is someone who works for some big bank on a trading desk, but this isn’t true. Of course those are professionals, but a professional trader can be anyone who takes their trading seriously, who approaches their trading like a job and has a set of trading rules that they follow. This might seem like a simple definition, but you’d be surprised how many people approach trading with no plan. And trading without a plan isn’t actually trading – that’s just gambling. And that’s not professional.
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STEP 1: DEVELOP A TRADING STRATEGY – The very first step to becoming a professional trader is to create a trading strategy. This strategy will affect every trading decision you make so it needs to reflect your ultimate goals and the style you use to try and achieve them. And while there’s a lot that goes into creating a profitable trading strategy, there are two key pillars to build around.
The first is that your strategy must have a winning edge over the long-term. Sure, you might have a few winning trades and be happy about your success, but that doesn’t make you a professional trader. A real pro has the ability to repeat their success consistently and over a long time frame. Second, you must manage your risk. The way to make money from trading is by building on the existing funds in your account. If you don’t protect your bottom line by incorporating an appropriate approach to managing risk, you simply won’t succeed long enough to become a pro.
STEP 2: TEST YOUR STRATEGY – After you’ve created your trading strategy the next stage is to test your strategy in the markets. Testing is the only way to know for sure if your strategy has a winning edge in real market conditions. For example, if your trading strategy is based on breakouts, you need proof that it actually works. The best way to prove that your system has an edge is to back test it using historical market data and there are many programs that allow you to do this.
STEP 3: TRUST YOUR STRATEGY – Once you’ve put the hard work into deciding on your trading goals, strategy and style, you need to learn to trust them. What this means is that you should follow the rules that you have set in your trading strategy for a period of time before considering any changes. You need to give your strategy a chance to perform. This can be a major issue for beginner traders as it’s very easy to be reactive and change your strategy quickly in response to a few losing trades. But remember, being a professional is a long term goal so you need to give things time to work. If your level of risk is suited to your broader strategy, you should be able to manage a few losses provided your long term profitability is increasing. Obviously, if you are sustaining consistent losses without any wins, you need to look at whether you have a more fundamental problem with your approach.
STEP 4: STAY DISCIPLINED – Once you’ve established trust in your system, you need to remain consistent in your trading activity. This means that instead of focusing on making a specific amount each day from the markets, you should focus on following your strategy each day. After all, this is the plan you’ve put in place. Your analysis has determined that this is the way to reach your goals. Anyone can win a few lucky trades. Professionals know how to stay in the game.
STEP 5: KEEP LEARNING – The best traders and investors are constantly learning and improving their trading abilities. Markets change. Systems change. New technology emerges. Part of your long-term success as a trader is to continue accumulating new knowledge and experience and applying it to your trading. Warren Buffett, widely regarded as the world’s best investor, recommends that professional traders read at least 500 pages a day. While this might be extreme, the point is that to be successful in the markets you should set aside time to learn more about the markets.
CONCLUSION – There’s no guaranteed way to be successful as a professional trader, but following the above rules will help improve your chances of becoming a pro. Just remember that true mastery of any activity is only achieved through constant application of the processes that lead to success.