Online trading is different for everyone, there is no ‘one size fits all’ recipe. There are also many different routes one could take – like forex trading, stock trading, Bitcoin trading, or CFD Trading.
This is according to the Chief Trading Strategist at CMTrading, Fred Razak. “No matter what your chosen area of trading is, there are a few principles that can be universally applied,” said Razak.
Here are Razak’s top ten most important tips when trading:
1. Find the right trading platform
According to Razak, choosing a trading platform to work with begins with finding a reputable broker and making sure the broker is registered with South Africa’s Financial Sector Conduct Authority (FSCA) or the United Kingdom’s Financial Conduct Authority (FCA).
“Once you have established the broker’s legitimacy, they will help you find an online trading platform that suits you. This is another instance where having an informed broker counts as there are many tools to help you trade online.”
These include MetaTrader 4, Webtrader, the CopyKat System, Guardian Angel, and various mobile trading apps.
2. Earn your stripes
Traders who have made it big often have humble beginnings. Set goals, shoot for them, and remain headstrong and determined. “Trading should never be a flat-out gamble. You earn your stripes by learning how to make informed decisions. What you put in is what you get out. There is no easy money.”
3. Build your own infrastructure
Razak said it's easier in today's world to trade the financial markets because of accessibility to information and technology. But any place of work needs the right tools at hand to be effective.
“Once you have selected your trading tools, make sure you have a stable internet connection. You need access to an easy pipeline to information – through reliable trading signals, your broker and even the world news, which greatly affects the markets every day,” he said.
4. “Steal” from the best
Emulate the success of those who have ‘made’ it. According to Razak, copycat trading is a method that entails following the moves of successful traders who are making money in the financial markets.
5. Learn to read signals
“Trading signals are essentially calls to action – either to buy or sell a security, stock or commodity. A professional broker has access to analytical tools and expertise that can provide you with informed trading signals, based on an analysis of the market, which is performed through a combination of automated and human-driven methods,” said Razak.
6. Don’t be a daredevil
Trading is risky. Razak said a stop-loss order is one of the measures you can take to protect your losses when you trade. “A stop-loss order is placed with your broker, and it builds in a ‘failsafe’ against certain losses by ordering that, as soon as a specific stock reaches a certain price, it is automatically sold to limit losses.
“Protect yourself from risk and loss at all costs, and never trade with money you can’t afford to lose, no matter how rosy the markets might look,” he said.
7. Be future-focused
Focus on the future. As uncertain as it is, one thing you can count out is the release of new or improved inventions that could revolutionise the world. If you trade right, you might hit the jackpot.
8. Practice
“Learn to swim before you hit the high dive board. There are always new trading technologies coming into the market and the market itself is completely fluid. Educate yourself, do your research, and always start with smaller trades that you can afford to lose before you put in your life savings.”
9. Try not to obsess
Razak said work-life balance is something he values extremely highly. He warned that trading should never become an all-consuming obsession; though for many traders, it does become highly addictive.
“Try to strike a balance between your passion for trading and/or watching the markets rise and fall on your mobile app 24/. Informed trading does not just happen at your computer. It also happens when you step away and think independently, refresh yourself, relax and enjoy your family time,’ he said.
10. Have fun
According to Razak, traders will have moments of incredible triumph and then moments of crushing disappointment. “Finding enjoyment and satisfaction in trading will make it far more worth your while from a personal point of view. Relish those moments of triumph and learn from the lows.”
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