Wednesday, August 28, 2013

Beginning Online Trading: Some Tips To Follow

Forex-sm
Forex-sm (Photo credit: Wikipedia)
Online trading has been a newer interest among the speculators and stock market investors. Features like low entry price, user friendly software and no experience has made the entire process, including trading, charting etc. researching quite easier. While the entire trade seems to be promising enough, there are many tricks and traps as well. 

Though it is not a big deal for those who are dealing with the processes for a considerable period of time, the new traders might not be familiar enough with the different techniques and even a little mistake might reduce their account balances hugely. So, here are some tips for the new investors in online trading; take a quick look before you are going to invest - 

  • Assess your financial situation – While investing in online trading is a good option for making money, it is important to check out if your financial status is stable enough for such an investment. Consider your present income, what are the basic expenses, what assets you have, how much debt you owe to the market, how much you can save after making an emergency fund etc. Make sure you have enough risk capital before investing and don't trade on options, stocks, currencies or commodities as that might lead you to serious financial crisis. It is advisable to be mentally prepared to lose some money and this is why it is important to have some meaning money or risk capital for making these investments. You can also consider using a demo account to get a feel of the market trends and how the entire process works. 
  • Learn about charting – Charting is an important process of online trading and hence it is advisable to study the movements of charted price of individual instruments or stocks. Consider observing the movements during different time periods of the day, moving from longer to shorter periods of time. This will help you understand the long term and short term trends of the market. Follow the long term trend thoroughly and set your trading strategies based upon that. 
  • Be concerned about the Entry Points – Observe the support and resistance levels closely when you are going to initiate the investment. Support level is that above which the stocks or other instruments stay while falling and resistance is the level at which the stocks and other instruments turn down on a rise. Always wait until the price reaches either of the level. Once you can track the underlying trend, be it support or resistance, open a position. 
  • Learn the basics of online trading on your own – It is advisable for the beginners to trade in a practice environment to feel your personal trading style. There are different spans of time available and you can choose according to your preferences. While some prefer turning the trades around regularly, others prefers to hold the positions for weeks or at least for several days. Choose your suitable terms of trading and do through research on that. You can visit teletrade in order to get information about FOREX, and know the terms and conditions of dealing with FOREX etc. 

Author's Bio – Jacks is a renowned blogger and he has been associated with guest blogging for the last ten years. He is a pro on writing on online trade, stocks investments, finance etc.

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