5 Secrets of Being a Successful Online Trader
Online trading is not for the faint of heart. With that being said, if you are willing to dive in and study your craft inside and out, there are plenty of opportunities to come out successful. There are secrets and tips to being online trader.
Although the art and science of online trading can’t possibly be explained in a short article, here are 5 concepts successful traders know like the back of their hand:
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Know Your Options
Online trading is so much more than long-term vs. short-term trading. As a trader, you should always be familiar with all the different moves at your disposal and one of your options is spread betting. In essence, instead of merely speculating on whether the price of a stock will go either up or down, spreads are all about the difference between your buying and selling positions. For example, if you bought in for $10 when the stock was at $50 and exited at $100, your initial investment will be multiplied by the difference between these values (in this case it’s 50 x $10 = $500).
Another option is becoming a CFD trader which falls under the umbrella of derivative trading. In essence, you’re initiating a contract for the difference as you’re speculating whether the financial markets will move either up or down, whether it be forex, stocks, or other commodities. Similar to spread betting, CFD trading also allows you to incorporate leverage, which could magnify both your wins as well as losses.
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Invest In Your Education
Unless you’re planning to leave this planet tomorrow, nothing is better than investing in your education. Since the dawn of the internet, many courses have been published on the topic of online trading. The idea is to learn the fundamental theoretical principles of trading so you can put them into practice later. In business, it’s all about following a system with strong fundamentals rather than making your decisions based on how you feel at the moment.
Education is one of your strongest assets.
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Monitor Your Positions
One of the advantages of online trading is that you can adjust your strategy on the fly if the financial markets make a sudden turn for the worse. An example would be to minimize your loss by exiting your position if you have a strong reason to believe it’s only going to go downhill from there. But to do so, you’re going to have to allocate some portion of your day to monitoring the price movements of the financial markets. This will give you ample time to react.
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Stick To a Trading Plan
Online trading professionals are diligent in their activities and tend to stick to a trading plan they’ve prepared in advance. To keep track of what still needs to be done, a trading journal will help you reach your trading goals much faster because it allows you to focus on the task at hand rather than having to figure out the next steps. Inside, you should outline the details about how many trades you still need to place for the day, which financial markets you’ve chosen to go after, etc. Remember that consistency is key.
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Discover Your Trading Style
Finally, a crucial element of online trading is discovering what trading style fits you best. Do you prefer cfd trading or are you more into holding your investments for the long term? The idea is to find what you’re comfortable with and become exceptionally good at it. Keep in mind a good trading style is always based on strong fundamentals and proven strategies like scalping. Of course, your choice will also depend on how many hours per day you’re willing to allocate to online trading.
Conclusion
Being a good online trader takes time, experience, and practice. But knowing that Rome wasn’t built in a day, you should find the will to carry on until you’ve reached your trading goals.
