Every start is hard and when it comes to business, it can become incredibly risky. Sometimes, a single bad choice can result in you losing the money you’ve been saving for years, gained through a loan or acquired by selling an asset. This is why you shouldn’t venture into such an endeavor head first. With this in mind and without further ado, here are four simple tips that will help you get your online trading business off the ground while exposing you to as little risk as possible.
1. Position or day trading
The first major choice you will have to make as a beginner online trader is the question of whether to become a position or day trader. The major difference here lies in the fact that day traders make massive decisions based on the daily fluctuations on the market, while position traders invest their money and wait for weeks or months in order to make a sale. Needless to say, while both of these styles are completely legitimate, for a beginner, day trading might be a better choice, seeing as how it gives more opportunities to learn right away.
2. Trading and investing are not one and the same thing
Another thing that every ambitious trader needs to learn in time is that investing and trading are not one and the same thing. A lot of people may confuse position trading with investing but even here, there is a massive discrepancy in long-term expectations. You see, with investments, you want to create a passive stream of income, which is why most investors prefer to diversify their investments. On the other hand, online traders only pick those stocks, commodities and currencies they believe will become more valuable in the nearest future.
3. The right digital tools can make all the difference
The next thing you should keep in mind is the fact that with the right digital tools on your side, you can make a huge difference. Nonetheless, this means that you have to look for the right online forex broker and a platform that is capable of providing several important features. Needless to say, your first priorities are some technical issues like latency and execution. After all, you don’t want to make the same purchase twice only because the platform lagged and failed to register your first order right away. Apart from this, you might want to look for a platform offering a demo trial, or at least one that has been covered by numerous reviews.
4. Investing more than you’re willing to lose is bad practice
Finally, with the right attitude and a cunning use of stop-loss order, you can still make money even if most of your trades are unsuccessful. For this, you would have to set your stop-loss order low (under 1 or 2 percent of your total net worth) and your stop-gain at a decent percentage (6 percent is more than reasonable). While it may appear that setting these orders here may be a bit restricting, keep in mind that you’re not in this line of work for the thrill but for profits. This is also why you should never invest more than you’re willing to lose, hoping that you could get rich overnight.
At the end of the day, one of the reasons why online trading is so popular is due to the fact that it allows you to set the game on your own terms. Different styles, strategies and commodities customize your trading experience to the extent where you won’t even be able to recognize the game. So, by adhering to these four simple principles, you will be able to adjust the game to your own needs and habits. Keep in mind, however, that it’s your money that’s at stake, which is why safety should be your No. 1 concern.