Online trading comes with a lot of excitement, especially after viewing the flamboyant lifestyle displaced by some of the purported online traders on Instagram. You quickly open an account and take part in this journey to become a millionaire in six months.
It’s all possible when done correctly and with patience. Many low-cost brokers have also started their operations since the advancement of technology allows different individuals with different incomes to participate in the market.
This article will help you get your right foot into the markets with the following five simple steps:
- Open a demo account
- Learn about the markets
- The power of Analysis
- Practice while creating a good strategy
- Keep learning and practicing trading
Open a demo account
Open a suitable account after researching a broker of your choice. Depending on the demands, requirements, and trading styles, brokers provide various accounts that suit you. That will force you to know which trader you are before risking your money in the markets.
An ECN account offered by forex brokers enables you as a trader to directly engage with the market and execute your currency or commodities at the lowest costs.
Some brokers enable traders to trade in their currencies if you prefer. This means you can make deposits in your local currency and trade with it in the markets. If that’s the case, open an account with the online broker that will meet your demand.
Additionally, many brokers provide demo accounts so that you may evaluate the trading environment and backtest strategies. You receive fictitious money to trade with and test your market approach while building your confidence. Start with a demo account if possible.
Learn about the markets
Baby steps. Take your time and learn about the markets. Learn the terminologies associated with the kind of market you want to be part of. For example, you can learn about shares, stocks, investments, going short, going long, and leverage while trading in the stock market. Going further to learn how each relates to one another will shorten your future learning curve.
Make good use of free online materials such as articles and eBooks that cover topics of your interest. Remember, it’s a journey, not a get-rich-quick skim. The knowledge gained will be handy in the future while researching stocks that will do better in years to come. So feel calm and enjoy the process. You can reach out to a professional trader you know or a higher one online to take you through the journey.
The Power of Analysis
Now you are confident enough to take on the next skill, analysis. Online traders use both fundamental and technical analysis to get an edge in the markets depending on the market they engage in.
While doing fundamental analysis, you’ll look for news releases, statements of a particular company you so desire to trade its stocks, and profitability forecast, among other information you can find related to the underlying stock.
On the other hand, you can use technical analysis independently or in combination with the fundamentals. How does technical analysis work? While doing technical analysis, you use the logic of supply and demand in relation to support and resistance lines. There are a lot of indicators that can help you confirm your bias in the market while doing technical analysis.
It’s not all black and white when it comes to investments. You need to factor risks into your trading plan as well.
Practice while creating a good strategy
We have many problems with using virtual money to practice trading, but it is the perfect way to engage yourself in the real market without risking your child’s school fees or your family’s lifestyle. Demo trading does not in itself engage the real trading emotions, so use it to take on trades while you learn working strategies on different time frames.
After testing your strategies on different timeframes and learning the flaws, create a real account and make a small deposit to engage the emotions of fear and greed. Do not stop practicing on the demo account. Use the demo account to practice new ideas and write each on a trading journal.
This is where the real work starts. You are now engaging with your real money. So take more time working on your mind and slowly develop confidence in the market.
There are a lot of traders who sold their shares during the coronavirus pandemic only to regret it when the stocks started skyrocketing. So how can a trader avoid such bad decisions when it comes to investing? The answer is in the discipline to follow your proven trading plan.
You should always invest what you are ready to lose, and the most important thing is getting a plan in place you are ready to stay loyal to even if stock prices begin to flop. This is much better than jumping blindly into the market with any plan, strategy, or goal.
Keep Learning and Practicing Trading
This journey is a continuous process. Though the market is considered a teacher, don’t wait to learn everything from your mistakes. Instead, grab a few books, articles, and trading journals, among other materials, and keep learning.
Alternatively, you can attend seminars, take online classes or even get a personal teacher or trader who will keep you focused in the right direction. Finally, you can be part of a trading group that suits your personality and engage in different trading activities to better yourself and narrow the risk of your trades in the long run.
Getting yourself premium content related to psychology or trading the underlying asset is helpful in the long run. You can also watch how those who have a lot of experience in the business trade. It all depends on how you prefer to consume information and what way is fastest for you.
A person who can critique your trades and strategies and give personalized attention can be handy for some traders. There are a lot of traders online who are free-spirited and able to help you with your journey to the top. Getting one you know or hiring one who is trusted online can boost your trading journey and shorten the process by showing where you are making the most mistakes.