Novice Trader? How to Increase Your Odds of Success in Online Trading

Online trading

Published by FrankNez Team.

Technology has had a huge impact on the investing arena.

It has democratized global financial assets trading, opening up a lucrative space to anyone with an internet connection.

The opportunities are limitless, but as with any investment activity, there are also risks involved.

While it is very easy and straightforward to get started with online trading, producing positive results consistently in the market is a very daunting task.

The pressure to perform is ever-present and can be very overwhelming.

However, success in online trading is a worthy pursuit.

Here are some tips to follow to increase your odds of success trading online:

Trading Education

‘An investment in knowledge always pays the best interest’

Benjamin Franklin

Like in any field, gaining education is very important in online trading.

It is also very important to gain the right education because the wrong one can be disastrous.

Education should also be structured: from basics, such as terminologies and market structure, to intermediate and advanced aspects, such as trading strategies, risk management, and trading psychology.

Traders can learn from plenty of sources such as broker websites, trading forums, and other internet resources.

Additionally, there are a huge variety of online sources available that offer insight into specific topics such as the best US Forex brokers and what strategies to use or not use in various situations. With so many resources right at our fingertips, it’s easier than ever for traders to become successful go-getters in the market.

Financial assets are very dynamic, so it is important to continually update and upgrade your knowledge and skills.

Education never stops, especially in the world of online trading.

There will always be plenty of market insights and analysis to keep tabs on, as well as news and events on the Economic Calendar.

Have a Trading Plan

‘A goal without a plan is just a wish’ – Antoine de Saint-Exupéry

Like in any business, having a plan will help guide you to consistent success in online trading.

A trading plan will detail how you will approach your entire online trading activity.

It will include your trading strategy (how you will enter and exit trades in the market), your risk management plan, as well as your trading psychology.

Risk is always present in the financial markets, and a trading plan will help you maintain objectivity as you make decisions in the market.

A trading plan should also include your trading log, which is essentially a diary of actions taken while trading financial assets.

A trading plan will simplify your trading activity, and help you build and maintain the discipline required to achieve success in online trading.

It will also help you keep track objectively of your trading activity so as to identify areas where you need to make improvements.

Choose a Good Broker

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‘All lasting business is built on friendship’

Alfred A. Montapert

Brokers provide access to the world of online global financial assets trading.

It is through their trading software that you are able to interact with the markets and trade your chosen assets online.

A broker is essentially your partner in the world of online trading.

A good partner will provide a good environment for you to achieve success, but a bad broker will practically pull you down before you even get started.

It is, therefore, very important to choose a good broker.

One of the first signs of a good broker is regulation.

Highly regulated brokers are required to keep client money in segregated bank accounts which are completely separate from their operating cash flows.

Regulated brokers are also motivated to offer transparent trading services because their platforms are subject to random inspections by relevant regulatory agencies.

Other factors to consider when choosing a good broker include the trading platform(s), experience or time in the market, reviews, industry awards, payment methods, and customer support.

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Practice on a Demo Account

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‘Practice makes perfect’

Coach Vince Lombardi

A common misconception is that trading on a demo account is only for beginners.

Granted, it is very useful for beginners because it helps them understand how to interact with the real market, learn platform features, as well as develop trading strategies risk-free.

But a demo account can also be very useful for experienced investors.

It provides a full-time practice arena for traders to advance their knowledge, skills, and experience in the markets.

Use a demo account to try new strategies, new asset classes, different charting tools and timeframe charts, new technologies such as automated trading tools as well as different risk management plans.

Spending time on a demo account will refine your skills, which you can thereafter deploy confidently in the live market.

A demo account is essentially a learning tool, which if used effectively, can make you a better trader and increase your chances of achieving consistent success in the markets.

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Use Trading Tools and Resources

‘Give ordinary people the right tools, and they will design and build the most extraordinary things’

Neil Gershenfeld

Tools have been used by humans since time immemorial to make work easier and more efficient.

Trading without the relevant tools and resources in this day and age is like doing manual work the traditional way.

There are plenty of trading tools and resources for online traders, but it is important to use the right ones the right way.

Some important tools and resources include the Economic Calendar, expert advisors (EAs), market insights and commentaries, forex calculators, asset correlation screeners, financial news websites, backtesting software, as well as charting tools.

In recent years, technology has continually made it possible to access other tools and services that can enhance your trading activity.

For example, it is essential to learn to copy trade or utilize diverse social trading tools. It is important to note that online trading is a skill-based activity.

Like any performance-based skill, there is no substitute for experience.

The more you use your favorite trading tools and resources, the more you will gain the requisite experience to deploy them in the right way and in the right circumstances.

Final Words

It is now easier than ever to access online trading but achieving consistent success has proven elusive for many traders.

Nonetheless, the above practical tips can help any trader to take their trading activity to the next level and increase your odds of success in online trading.

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