It is a generally accepted fact that humans’ wants are unlimited but the resources to satisfy those wants are limited. The worst part is that your expenses are likely to increase as your responsibilities increase but your income would not necessarily increase at a comparable rate. Many people invest in stocks and commodities as a means to generate additional income. In the years past, most of the people taking part in the capital, forex, and commodities markets were passive investors and very few people are active traders.
Now, many people are now turning to online trading activities as a means to close the gap between their income and their expenses. Online trading accounts allow you to partake in the capital markets, forex market, and commodities market. Some online trading platforms such as Trade-24 allows you to trade right there in the comfort of your home, on a computer or a mobile device – you can visit Trade-24 homepage for more information.
This piece seeks to provide newbies getting into online trading with a definitive guide that can take you from being a rookie trader to a rockstar trader.
Basics that all New Traders Must Know
- New online traders must learn how to obtain, read, and understand basic trading quotes. You must know the meaning of the following terms. Buy, Sell, Currency Pairs, Pips, Micropips, Lots, Ask, Bid, Size, Last, Change, High, Low, Open, Close, and Volume.
- If you are planning to trade stocks, you must have a dossier of the best sources for keeping tabs on the major market indices. The major market indices include Dow Jones, S&P 500, Russell 2000, NASDAQ composite, and NASDAQ 100.
- You must learn all there is to know about order placing terminology and the different variations to your orders. Order terminology include: Buy, Sell, Quantity, Price, Duration, Type of order
- You must understand position terminology in line with your trading/investment thesis. Position terminology include: Long, Short, Bull, Bear, Call, Put
- You must learn how to consider the effects of your trading decisions on your trading account and finances at large. Most new traders don’t build a strong connection between their trading accounts and their finances; hence, they tend not to approach trading decisions with the seriousness that it requires.
Skills for Improving Your Trading Skills
- You can improve your trading skills in order to have better chances of making profitable online trades by doing the following.
- Studying different trading strategies until you find the trading strategy that is suited to your trading experience, risk level, trading capital, time, and personality traits
- Learning how to execute your preferred trading strategy with an unwavering commitment during bull markets, bear markets, and when the market is stuck in a range. You must also learn how to use analytical tools in order to make data-driven trading decisions. An article on TRADE 24 on NewsBTC provides an insight into some of the analytical tools that the platform offers new traders.
- Learn how to see patterns and trends in your trading actions, market cycles, and market activity. An understanding of patterns and trends will help you to make smart short term and long-term trading decisions.
- Cultivate the habit of reading/watching news headlines and breaking news. You must also learn how to decode how the news might affect current trades and potential trades
- Learn how to anticipate all the possible outcome of any given trade and how you’ll act logically in each scenario. You must have an Entry price for joining a trade, an Exit price for taking gains off the table if the trade is profitable, and an Exit price for cutting your losses if the trade becomes unfavorable
- You must understand the impact of brokerage commissions and fees on your account and learn how to place trades that puts the fees and commissions in your favor
- You must learn how to use limit order on all of your trades
- You must learn the art of faithfully keeping a trade journal where you’ll record all of your trades. You should also learn to refer to the trade journal regularly – you’ll learn from all of your past trades (especially the losing trades).
Avoid these Pitfalls like the Plague
- As a beginner, you’ll most likely do some demo trading before you start trading with real money. During your demo trading, avoid approaching the trades as a game because you are not trading with real money.
- During your demo trade, avoid trading with a demo account that doesn’t reflect your true trading capacity. If you want to open a $20,000 trading account don’t demo with a $100,000 account
- Know your trading level as a beginner and avoid jumping into trading strategies designed for advanced players
- Avoid the lure of margin trades. The leverage provides exponential returns on your trading capital as well as “unlimited” losses if you enter the wrong trade