Are you wondering what it takes to become a successful online trader? If so, there’s good news. For anyone considering taking on the challenge of becoming a serious, dedicated trading enthusiast, there are five clear steps to follow. In fact, countless people who wanted to get involved in the exciting world of stock, bond, commodities, currency, options, futures, and other kinds of trades have followed the same five steps.
How to begin? As is the case with any new activity in which you’ll be putting your hard-earned funds at risk, the smartest place to start is with research. That means reading lots of articles, and perhaps a few books, on the subject of online trading. Find out what some of the experts think, read short pieces in financial publications, and follow your own line of interest. That’s why step one listed below is all about finding the area of investing that suits your particular preferences.
Choose Your Preferred Market
Investigate the various markets and decide whether you’re comfortable with stocks, bonds, cryptocurrency, options, commodities, ETFs (exchange-traded funds), indices, futures, or something else. There’s a lot out there, so spend time reading about the pros and cons of all the choices.
Set Goals and Make a Budget
Decide how much you want to earn or risk within a specified time period. For example, it’s wise, as a new trader, to set conservative profit goals, or to simply aim to break even during your first few months of trading. Also, make a detailed budget of how much money you can afford to allocate to this activity each month. A universal rule is to only trade with money you can afford to lose. In other words, don’t use your rent or daily expense money for your account.
Choose a Broker
Take you time to shop for a reputable, reliable broker that caters to new traders and offers low fees and commissions. There are literally hundreds of brokers out there but only a dozen or so major, reliable platforms that you’ll need to look at. Read customer and client reviews and check out the websites of any broker you think might be a good fit for you. Read all the fine print about how to open and account and see if there are any minimum opening balances.
Learn the Nuts and Bolts of Trading
There are plenty of details to learn, but don’t be intimidated. If you take your time and spend time practicing each method, you’ll learn rapidly. For example, most brokerage platforms offer new traders the chance to use simulators, or trading robots that are ideal for practicing your skills. The way these simulators work is interesting. You open a fictitious account, for practice purposes only, that contains a fixed amount of fake money, perhaps $10,000. Then, you try your hand at placing orders, buying stocks, bonds, and other instruments. When prices go up, you might decide to sell for a profit. You’ll learn how to get into and out of positions by using the correct commands and types of orders. There’s no better way to learn the intricacies of trading than on a simulator.
Open and Fund an Account
Opening a trading account is the easiest of the five steps listed here, but can be a major psychological hurdle for some investors. Why? Because this is the point at which your money is on the line. All the education, practice, research, and efforts you have made up to this point are now coming into focus. You have chosen your market, commodities for example, made a detailed budget, decided how much you wish to earn each month, shopped for a broker you can trust and who has low commissions, practiced order-placing on a simulator, and funded your account. Now, you’re ready to go, and the feeling can be a bit overwhelming.
Remember that you are in the same position that millions of others have been in, and those first few trades will be a nervous experience whether you make or lose money. But, after a few weeks, that initial shakiness will wear off and all your hard work will begin to pay off. You will be able to effortlessly make trades after doing the required research, follow each of your asset’s day by day, and close your positions with either a profit or loss. At the end of three months, do an audit and review of your activity to see where you made wise or unwise decisions. Learning from mistakes is the sign of a mature trader. Plus, when you understand when and why you make an error, you’re educating yourself and sharpening your skills.
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