7 indispensable tips to succeed in online trading: A comprehensive trading guide

7 indispensable tips to succeed in online trading: A comprehensive trading guideWe are right in the midst of a digital revolution. You can execute practically every social and economic activity via the internet. The advent of the internet has revolutionized trading immensely. This online trading guide is, therefore, pivotal for your online trading experience. What is online trading? It’s the purchase and sale of certain financial products over the internet, enabled by an online trading platform that acts as an online broker. Many successful online traders are making fortunes while others who may be equally skilled have failed or are suffering significant loss. Here are some crucial tips to help you succeed in online trading.

  1. Acquire the necessary information

Knowledge is power, and information liberates. It is of absolute necessity to carry out extensive research and due diligence about online trading. Understanding the modalities of online trading is critical for successful trading. Before embarking on it, you should have ample information about the;

  • General terminologies
  • Various financial products
  • Online trading platforms
  • Risks involved in online trading
  • Applicable laws regulating online trading in the United Kingdom
  1. Choose a favourable financial product

The are many online financial products available for trading. Identifying favorable ones is vital. It’s essential to narrow down to a few, two or three, rather than engage in several. It enables you to horn your skills in a small and sustainable niche with an increase in the possibility of being truly successful. The various popular financial products available include;

  • Forex
  • Stocks
  • Contract for differences (CFDs)
  • Bonds
  • Exchange-traded funds (ETFs)
  • Cryptocurrency
  • Exchange-traded commodities (ETCs)
  1. Find a reliable broker

Online brokers are the core determinants of a successful online trade. Your level of experience influences your choice of a broker. For instance, beginners should go for non-complex trading platforms which offer demo trading platforms and tutorials, while experienced traders may use more technical platforms. Look for these qualities in a broker;

  • Regulated by Financial Conduct Authority (FCA)
  • Convenient trading platform with perfect execution of orders
  • Ease of deposit of funds and withdrawal of profits
  • Prompt and effective customer care service
  1. Develop a trading strategy

There are various trading strategies employed in online trading. None of them is a sure bet as they all have pros and cons and carry significant risks. However, the risks involved vary, and hence some are more advisable at certain levels of experience than others. There are broad trading strategies that you employ in addition to your trading skills. Such trading strategies include;

  • Day trading

It implies that you open a trading position and close it within a day. In other words, you don’t leave positions overnight

  • Swing trading

It involves trading according to sudden trends in the price volatility of a financial product

  • Position trading

It involves holding a trading position for several days, weeks, or even months

  • Scalping

It involves exploiting minor and temporary changes in price trends. It is mainly associated with the use of high leverage to maximize returns.

  1. Manage risks

Most online financial products are traded using leverage or debt, which is also known as margin trading. Thus, you can open a position in the financial market with debt money, which means that if you open a position with £2000 and leverage 100:1, you are up to manage a position of £200,000 in the market.

Leveraging, therefore, multiplies potential returns greatly and has become a great attraction for online traders. However, with such increased potential for returns comes also increased potential for loss. Leveraging can lead to loss of more than your initial investments, and hence you should trade leveraged products with money you can afford to lose. As a rule of thumb, this trading guide recommends that the higher the leverage applied, the more knowledge and trading experience you should have.

  1. Have the proper trader psychology

Trader psychology is the overlooked difference between a successful online trader and a loser. While many insist on skills and experience, your mindset in trading is what makes or breaks you. Trader psychology encompasses;

  • Managing fear and anxieties

The financial markets give sufficient adrenaline surges. They keep fluctuating, causing fear of impending doom and loads of anxieties. A trader should train to control their emotions and avoid acting out of impulse. Overreacting may lead to losses of unprecedented proportions.

  • Use profit targets and stop losses appropriately

Profit targets and stop losses are points in price where the trader automatically exits a trade after considerable profit or loss. They are essential, especially in the management of emotions, by preventing rash decisions.

  • Exercise self-discipline

Self-discipline would involve setting your own trading rules of engagement. It’s hard to develop these rules, let alone abide by them. However, have this in mind always; you will live to trade another day. When you make a significant profit, call it a day. Similarly, when you make a painful loss, call it a day. As long as there’s tomorrow, you shall live to trade again.

  1. Learn from successful traders

There are many successful traders in the United Kingdom and the world at large. Learning from them would mean reading their books and attending trading seminars and conferences where possible. Using trading strategies of successful traders is alright, but you would rather have one customized for your needs. Even successful traders suffer losses, and hence their strategies are not a guarantee for successful trading.

However, many self-proclaimed successful traders, especially over the internet, invite you to paid courses and webinars, which may not necessarily be beneficial. It is crucial to determine whether a particular successful trader is actually who and what they say they are.

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