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A newbie’s guide to online trading: A how-to guide

If you are considering a venture into the world of online trading, you are certainly not alone.

 
 

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A growing number of individuals have already realised significant profits and some are now even full-time traders. Although it definitely pays to be a winner, jumping into this realm without a game plan will almost certainly result in defeat. Let’s look at some excellent beginner tips which will enable you to get started in the right direction.

Choosing the Correct Platform

Embracing a proper online trading platform is absolutely essential, for you need to be provided with cutting-edge tools as well as real-time access to the markets themselves. It is therefore wise to spend a good amount of time reading what others have to say as well as researching the aspects which enable larger portals to stand out from the remaining detritus.

Understanding Risk

Risk and reward have always enjoyed a hand-in-hand relationship. The greater the risk, the higher the possibility of enjoying a reward. Each trader is defined by his or her own level of tolerance for a given position. If you hope to accrue liquidity over time, it is best to avoid high-risk trades or leveraged methods. It is also likely that your appetite for risk will increase slightly as you become more experienced.

Appreciating the Different Sectors

Every investor has his or her favourite sector. For example, some enjoy the superior levels of liquidity associated with the Forex markets. Others take a more conservative approach and embrace indices. A handful of other options include:

  • Contracts for differences (CFDs)
  • Shares
  • Commodities
  • Treasuries
  • Binary positions

It could be wise to venture into each of these in order to determine your personal “comfort zone”. You can then choose to focus upon one or two areas over the others.

Know Your Limitations

Would you ever plan a road trip without knowing how much petrol is in the tank of your vehicle? This very same principle should apply to the art of investing. How much can you afford to lose in the event of a worst-case scenario? Establish your weekly and monthly spending limits and even if you are in a profitable position, never exceed these levels. Large profits are often associated with equally sizeable reversals. The best way to avoid such situations is to limit the amount of fiscal exposure associated with a trade. Even if you lose, you can afford to play another day.

Practice Makes Perfect

Many online “sure-fire” trading guides claim to be able to make you a millionaire overnight. Not only are such claims patently false, but they can be dangerous to believe. Much like any skill, becoming a successful trader takes time. Learning to trade correctly is also associated with aligning yourself with the best online resources in the industry. You will then be able to leverage this knowledge to your benefit.

Above all, remain enthusiastic and never forget that even expert traders are not correct 100 per cent of the time. Part of the satisfaction involved with investing directly correlates to the learning curve that you will experience. Stay humble and always embrace the desire to learn more. You can then expect to enjoy a bright and potentially profitable future.

 
 

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