11 Tips to Trade Online Successfully in 2019

If you want to trade online successfully, you should be conscious of the risks and rewards. Also, you should have expectations for your trading career. You do not have to burden yourself with too much information and resources. However, it is important that you are clear about what you want.

Here are 11 tips to give you more clarity so that your success can be enhanced.

• Seek knowledge

Before you start trading, seek knowledge. Most traders that fail in financial markets do so because they put the cart before the horse. In trading, a zero-sum game, the money you make will be from other traders.

Consequently, it is important you know deeply about what you want to do. Master financial metrics. Learn the approaches to analyzing the market. The more you learn, the better trader you will become.

• First, grow an emergency fund

If you wake up every day with the need to make a gain off financial markets, you will be in for failure. Think about it. You will be under a lot of pressure. And because of the tense state of your mind, you will realize that you are just another desperate clueless trader.

To prevent this situation, stash aside cash enough to take care of your living expenses for at least three to six months. Also, it will be best if you start with an amount you can afford to lose.

• Save to have enough trading capital

While, to manage risk, starting small is advised, it is important you note that to be able to profit substantially from trading, your capital has to be substantial, too. Even if you use leverage (more about this later), it would still be better if your trading capital is significant.

Thus, even though you might start small, you should work towards having a substantial trading capital in the long run. It is either you save up for it or you trade your way to it. Either way is fine.

• Get yourself a trading mentor

A mentor is someone who has been to where you seek to be. And in trading, the importance of one such individual in your life cannot be overemphasized. Find an expert successful trader who will be willing to show you how they did it.

Although mentorship should not totally replace your own ideas, it should, instead, provide the necessary experience and expertise to fine-tune them.

• Assume a long-term view of the market

Even though you will be a trader (traders concentrate on short-term moves in the market), you should have a reasonable view of the markets. The longer the time frame you trade, the lesser the time you need for analysis. Moreover, long-term perspectives to the markets have historically yielded more returns than their short-term counterparts.

The stock market grows with time. And the short-term dips in it, which often end up correcting themselves, can be really distracting.

• Take calculated risks

Do not be afraid to take risks. In finance, both risk and reward are positively correlated. However, you should take only calculated ones. Else, you might get burned. For example, use leverage, but use it reasonably.

What is important is that you know the consequences of any tool you use and be prepared for them.

• Do your own research

No matter how much you hear and how far you see, nothing should ever take the place of your own research. Read the news. Study books. And understand how different events and political decisions affect the markets.

You can subscribe to fee-only financial newsletters of a high repute. The more you learn and understand, the more you discover that you are able to link markets events and connections yourself. The point is to hone your research skills so that you can become a successful trader in your own right.

• Learn to manage your emotions

In the business of online trading, unchecked emotions can have damning effects. Fear. Greed. Indecision. These are the most popular emotions that often drive traders to their ruin. These pernicious emotions suck their energy and drive them to make fatal mistakes.

For example, fear. A fearful trader sells when a position temporarily moves against him. Even though the position can reverse to become a profitable trade, he will not be patient enough to see the market fully play out in his eyes.

• Trade only what you know

There are multiple financial instruments to trade. There are Forex, CFDs, stocks, fixed income securities, and cryptocurrencies. You can choose to trade any of those, but it is important you recognize your personal preferences, risk tolerance level, and your knowledge depth.

That is, it is important you know before you trade. Before you settle for any financial asset to trade, first know if it will be right for you. Trade only what you know.

• Ensure that your broker is a registered one

Your broker will execute your trades on your behalf. It will also hold your trading capital for you. Thus, it is important you ensure that it is a registered one. So, how do you confirm if it is? By checking its status with the appropriate regulatory authority in your country.

If you are a stock trader and you are resident in the United States, for instance, check if the broker you want to use is registered with the Securities and Exchange Commission (SEC). And if you are a currency trader, confirm its status too with the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC).

• Diversify

If you are a stock trader, diversify. You can devise a trading strategy that will combine, for example, both growth and value stocks. Also, you should include high dividend-yield stocks as dividends will be like an icing on the cake of your capital gains.

Moreover, although riskier, you can also decide to trade international stocks. They will ensure that your trades are not subjected to the idiosyncrasies of a single government, thereby giving you more opportunities for profitability.