Online trading is accessible, exciting, and educational and offers traders great opportunities to make good money. However, many traders fail to achieve success because they lack a clear vision and focus. According to statistics, over 80% of online traders are losing money due to lack of expertise. Nevertheless, it is not easy to become a successful trader that knows how to exploit on currency changes and regularly make a profit. Picking your trading style is always the first step, do you want to trade stocks, forex, cfd trading, spread betting?
- Develop a Trading Strategy.
To become a profit making online trader, you need to have a clear vision and focus. It’s to have a perfect idea of possible changes in the market and the kind of actions that you take. There are many trading strategies available for you to choose from. From becoming a scalper, a positional trader or a swing trader, the most important thing is to develop a plan that you feel contented using.
Developing a strategy is a trial and error process that take a long time and patience to accomplish. As a trader, you must understand what you are doing and why you are doing it. Consider using a demo account as it proves vital at this stage because it allows you to test your strategy with no risks. Be patient and don’t get discouraged by the amount of time developing a strategy takes. Stick with it, and you will succeed.
- Don’t Be Greedy.
Most traders want to make a lot of money, so they throw money in worthless stock because it is going up. You might be in need of quick money but remember some companies manipulate their stock in the market making it to rise. Also, understand that to make a good profit, you need to stay in a good stock for a long time.
- Know The Basics.
Take a few hours to read and familiarize with basics. Trading is simple if you understand the basics. Acquaint yourself with the influence of market and sector indices, the interaction between various equity markets, the impact of interest rates and interaction between equities, bonds, currencies, and commodities. Be familiar with trends, chart patterns, and time frames. It takes a long time of practice, analysing charts and applying the theory before you will achieve any fluency.
- Be Strict Whenever You Make a Loss.
Traders lose money in the trading market due to simple mistakes. As a trader, find out where you went wrong and ensure you don’t repeat the same mistake by researching your stock options well. Cut your losses and get out of the market when you are losing money. Likewise, if you are winning, come up with a good stop loss strategy that will help protect your winnings when the stock market start going down. If you face any losses while trading, cut the losses and move on fast. Do not dwell on your failure, but instead look to the future. Remember, while trading you are going to fail sometimes, so be prepared and just be ready to move on.
- Avoid Leveraging.
Most traders borrow heavily from others to make more profits. Although leverage may work in some instances, it can also lead to huge losses if the market sequence turns. The result can be fatal to traders to extent of causing mental stress, destruction of own life and that of family members.
- Don’t Act If You Are Not Sure And Limit The Number of Stocks.
First be sure which way the stock market will move before making a move. Consider being a passive onlooker instead of joining in the market action. Ensure the number of stock you are holding are not more than 20 stocks. Ensure the companies you are trading from are operating in different sectors to protect your portfolio from losing its worth.
- Consider CFD.
Spread betting offers you an opportunity to get a wider choice of markets and also get more in-play options while trading. CFD is a safe form of betting, but it only becomes risky if you want to be. By controlling the size of your stake, you get a chance to control how much risk you are willing to take on. Online trading companies like CMC Markets offers great spread betting opportunities that you can try.