13 Simple Tips to succeed in Online trading
Online trading is a form of investment in which people (investors and traders) buy and sell tradable financial assets over an electronic network called online trading platform. These financial products include bonds, stocks, currencies, commodities and derivatives.
The investment can be highly lucrative. But when you invest in the stock market, you never really know how it will end. You must anticipate losses and plan your strategy well to make up your losses. There is, of course, no miracle to win, but there are still some good strategies or techniques you can apply to increase your success rate
Here are 13 tips to buy stocks and succeed in online trading
- Learn about online investing and the market
To be a winner in the stock market, you must first know what it is and how it works. You cannot overcome an enemy if you don’t know his combat strategies: weakness and strength. It is the same for the online trading business. Learn all you can about the stock market before you start investing. Neglecting doing so is purely gambling and the result will be bitterly disappointing.
- Create a strategy
To successfully invest in the stock market, you will need to have a good overall strategy while remain informed by reliable sources. Your information will need to be up to date according to the market trends and emergence of new products. Your strategy must be created in advanced and every single point in it must be rooted in a proven method. That is, follow what is already working for other traders.
- Investing in the Forex
The Forex (foreign exchange market) is the market on which so-called convertible currencies are exchanged against each other at constantly varying exchange rates. This market, global by nature, Forex trading is the second largest financial market in the world, behind interest rates. It is nevertheless the most concentrated and the first for the liquidity of the most tradable products. With some knowledge in the Forex trading, coupled with a good strategy, these currencies can be very lucrative. But it is better to avoid doing business with traders.
4. Take advantage of takeover bids
You will do very good deals on takeover bids and, in the worst case, the losses will be small. If you occasionally buy from these securities, you could take advantage of an outbidding. Thus, you can realize good “capital gains” at small expenses on the stock exchange. If you are not too experienced in trading online this is a good way to increase your success.
- Buy and sell at the right time
To make profits, buy a stock when no one is interested in it with great intensity, and sell it when people want it at all costs. As the American billionaire Jim Rogers said, to win on the stock market you have to buy stocks, wait for them to go up and then sell them. That’s very simple, hun? And yet, the reality is that few people are able to sell well.
When you just buy a stock, watching its course will trigger a series of emotions: fear and greed. If your position shows a loss you will be tempted to sell because you will be afraid to lose. Conversely, if you are in surplus value, you might be afraid to lose your gain, at the risk of seeing the stock continue its rise without you. So you should not let your emotions dictate your sales decision.
- Stay regular
Do not worry about stock charts. They can be very variable and change course quickly. Invest each month a similar amount in a single title, no matter what you will see on these charts, at least you have vivid and tangible proof to deviate. This advice is even more important if you are new in the online trading business.
- Do not invest in the same place
The old proverb says “don’t put all your eggs in one basket” also applies in online trading. Do not put all your money in the same stock. So if there is a significant decline in values, your losses will be much less dramatic.
- Have limits
Excess is always harmful. There is no exception for trading online. You have to have a limit, when to buy and when to sell; the amount to sell, and the amount to keep. It is better to have a fixed amount so that you do not deeply regret or become dependent on the market. You know, it’s not everyone who manages to become a millionaire in less than 10 years in the stock market, so watch out for the limits you set yourself. Trying to accumulate wealth overnight is nothing but gambling, and you will most likely lose.
The key is to Keep your calm and go simple. Hyperactively trade over 30 orders a day on the basis of complicated mathematical indicators is not a smart behavior.
- Consider long-term investment
If you have the idea to invest on the stock market to enrich yourself quickly, you will likely fail. Unless you are extremely lucky, you will not double your investment in the stock market in the first year, or even the second one.
Although shares are the best performing asset class over the long term, they have been performing between 10-12% per year on average for 30 years. This performance is also accompanied by high volatility. If you have an investment horizon too short, you will be tempted to take disproportionate risks to earn money quickly.
- Keep your shares for a long time
In the short term, stocks are volatile. They react to all the mood swings of the market. Forecasting short-term market movements is impossible. In the short term, the market behaves like a voting machine, but in the long run, it behaves like a balance.” Unfortunately, too many investors still see the stock market as a beauty contest.
The key to success is to be patient and remain attentive to the fundamentals of the business. The price always ends up reflecting the intrinsic value.
- Think like a partner
Stocks are not just paper; they are a title to the assets of the company. If you are buying shares/ stocks of a corporation, be a responsible partner. Follow your company closely, study its annual reports.
- Search for quality titles
Focus your efforts on identifying companies with sustainable competitive advantages that acquire or develop an attribute or combination of attributes allowing them to outperform their competitors. A sustainable competitive advantage is a good guarantee that the company will retain its profitability for many years to come. This competitive advantage may, for example, take the form of a strong brand. The classic examples of such companies include Google, Coca-Cola, Hermes, and McDonald’s.
- Consider taking intrinsic value into account
The difference between an excellent company and an excellent investment resides in the price investors pay. During the Internet bubble, there were many good online trading companies on the market, but it was almost impossible to buy cheap stocks. Finding quality titles is only half of your mission. The second half: wait for prices to fall enough to make the investment worthwhile.
- Reserve a margin of safety
Unless you have the faculty of perceiving things or events in the future or beyond normal sensory contact (clairvoyance), you cannot predict the future of the market. To avoid the inherent uncertainty in the future, be sure to buy your shares at prices well below the intrinsic value. This will give you a margin of safety if the stock falls.
- Think independently
Don’t just follow the crowd. As one of the greatest investors that the world has ever known, Warren Buffett, says, ‘Be Fearful When Others Are Greedy and Greedy When Others Are Fearful’. You will succeed in your investments by fair reasoning, not because others think the same.
If you manage to keep your head cool enough to buy during the price drops, you will be well positioned to enjoy the rise when it comes.
Following these simple tips will surely help you avoid many nightmares that other experience. They can greatly increase your chance of success in the online trading business. If this post has been helpful or beneficial to you, kindly share it with friends and family members.
- Storck Trading Warrior: “The Meteoric History of Online Stock Trading”.
- TDAmeritrade.com. TD Ameritrade IP Company: “About TD Ameritrade”. Retrieved 2017-05-27.
- The American On guargd Investing group: OnGuard Online – Online Investing
- UK FSA (Financial Services Authority): Addressing the Risks in Online Stockbroking – U.S Securities and Exchange Commission: EDGAR database