It’s hard to believe that a dentist in Michigan made the first online trade 11th July 1983.
It’s even harder to believe that today online trading is one of the most common forms of trading. Now virtually anyone with access to a computer and internet connection can trade online.
If you’re trading online, or thinking about trading online, then surely it means you are keen to make more money. If that is the case, then what you need to do is, be a wise trader if your plan is also to survive the game. Here are 7 easy online trading tactics that will help you get there, and if followed correctly, they’ll work every time you trade.
Tactic #1: Get Knowledge to Gain Confidence Trading Online
Lots of people want to learn how to trade, and most go about sifting through the vast amount of information available on the internet and through media. Building your knowledge and confidence means knowing how to trade online successfully and enjoying the great returns the stock market has to offer. But to learn how to trade takes time, yet time spent learning is your best investment, so finding a good coach and mentor from a reputable source like Trading Pursuits will get your online trading off to a very good start. The goal is to gain a solid knowledge of the market and how it works, so that you build the confidence to apply that knowledge in the stock market.
Tactic #2: Traders Who Want to Get Rich Quick Tend to Take on Too Much Risk!
Don’t take on too much risk! This is done by trading with excessive leverage, by investing too much in one position, or engaging too much of your capital at once. With the unpredictability of the markets, and the speed at which online trading occurs, taking on too much risk can either go very, very good, or very, very bad. You really don’t want to be risking your capital by throwing all your money at what you think is ‘a sure thing’, or by over trading, or by holding onto a losing trade for too long. If you’re not focusing on the risks, and not following a solid trading plan, you are seriously putting your capital at risk.
Tactic #3: Diversify your Online Trading Portfolio
One of the best approaches to protecting your capital is to diversify. Diversifying your portfolio is an important risk management strategy. By spreading your portfolio across multiple positions, you reduce the risk of losing a large percentage in one trade. Though it’s argued diversification also limits your gains. Don’t listen. Cash is the lifeblood of share trading. If you lose your capital, then you won’t be able to trade. Although your goal is to make money, you’re better off not going for broke on huge gains, but sticking to a sound risk management plan that will keep you in the share trading game for the long term.
Tactic #4: Stick To The Plan
People who are in a hurry to make a lot of money trading online tend not to do a good job at managing risk. But having a sound trading method that limits your potential downside risks of a trade will almost certainly keep you in the game for longer. That’s important if you’re serious about making money trading the stock market for the long term. But remember, risk management is a skill, one that requires development, especially when emotions get in the way like fear and greed. Managing risk means more than just focusing on the potential downside of a trade, it also requires having the right mindset towards trading the stock market that allows you to profit successfully over the long term. Skilled traders manage their emotions by having a clear plan in advance and sticking to it, even in the heat of the moment.
Tactic #5: Develop Different Trading Methods Based on Market Conditions
Thanks to online trading, with its fast-pace, has accelerated the time in which the market fluctuates. The markets rise and the markets fall. Trends emerge. Trends pull back. They reverse and ranges develop. Different market conditions pose different trading opportunities and threats. That’s why one trading strategy is not always suitable to all these changing market conditions. For active traders, having different strategies to suit all types of market conditions is a crucial factor to successful online trading. Once you have adopted several strategies, it’s important you know when to implement each type of strategy to its relevant market condition.
Tactic#6: Practice, Practice, Practice
Once you’ve started learning how to invest money online trading, it’s worth your time to practice trading before using actual money. Lots of good quality brokers offer demo accounts on their websites. And practicing trading on a demo account can give you the confidence and allow you to work through most mistakes you’re likely to make. Spectrum Live offers valuable tips to practicing stock trading online, and a great platform on which you can practice.
Tactic #7: Keep Your Emotions in Check
Keeping your emotions in check is sometimes the hardest part to online trading, because it’s human nature. Emotions like fear and greed can run wild once your money is at stake in the market. Often we can lose our grip on rationality, and our adrenalin glands get pumping as soon as we’ve executed a trade. Your online trading plan and risk management techniques are essential to keep your tendency for fear and greed in check. The rule is to arm yourself with a solid trading plan in advance. Identify your entry signals, exit signals, profit targets and stop losses long before you engage a single dollar on the trade. Know what you’re trying to achieve before you set out. Having a ‘map’ and knowing not only where you want to go but where you are at any given moment, and also where you are not prepared to go. With help you avoid feeling ‘lost’ in the trade.
Daniel Kertcher| Founder and CEO | Trading Pursuits Pty Ltd
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