There are so many reasons why people decide to engage in the business of online trading. First of all, trading in stocks comes with a low transaction cost, which means that the number of trades you conduct on a daily basis won’t be affected by fees. Second, it gives you a lot of flexibility when it comes to where you invest, as well as when you invest, making it a perfect career choice for those who already have a day job or a business they’re running full-time. Finally, it gives you a chance to monitor your investments in real time, and in this way, get a much greater sense of control over your money.
Still, if you want to have a serious shot at online trading you need to make sure you know a thing or two about this industry in the first place. We’re talking about the downsides, the hazards and the tips you could use to your advantage. Here are some of them.
1. The downsides of online trading
In order not to seem too optimistic about online trading, it is vital that we start by listing at least a couple of downsides you need to be wary of. First of all, you have no direct contact with a broker, which means that you don’t have a connection on a personal level you can use to your advantage. Second, like any other form of trading, it is addictive. Finally, it is easy to get carried away and invest too much too quickly.
2. Where should your stop-loss and stop-gain be
The most efficient way to protect your assets in the world of online trading is through a stop-loss and stop-gain orders. Unfortunately, a lot of people don’t know where to set these two important orders. As the rule of thumb, your stop-loss should be at about 1 percent of the overall value of your assets while your stop-gain should be at about 7 percent. In this way, you can still be profitable even if as little as 30 percent of your trades are successful.
3. The choice of platform makes all the difference
In a world where seconds and minutes can make a difference between success and failure, you need to make sure you get the platform that offers low latency and as high execution as possible. Furthermore, you need a company that has been approved by adequate commissions and the one that is deep enough in the world of online trading that it can provide you with the necessary information in real time.
4. Exercise patience
There are numerous investment strategies you might decide to go for, however, if you quit after a week or a month of no success, your approach to online trading will be the one of a gambler and not the one of a trader. You see, in order to check how well a certain strategy is working for you, you need to stick to it for at least a year.
5. Only trade with what you can afford to lose
While this may seem like a bit pessimistic piece of advice, you need to adhere to see this rule as the main principle of your business strategy. You should never invest more than you can afford to lose. The only reason why some decide to do this in the first place is if they hope to get rich quickly. Needless to say, those people don’t have a bright future in the world of online trading.
At the end of the day, with these five ideas on your side, you will have a much better shot at making it through your first year as an online trader. Once you gain the necessary experience, you will become much better suited to make important calls and, in time, perhaps even become so confident that you switch to full-time online trading.
Dan Radak is a marketing professional with eleven years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.