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Thursday, February 21, 2013

Learn trading

Making money online is probably one of the most popular topics for those who want to do internet business. People need stable income and moving your job to cyberspace seems to be a very attractive and enticing activity that presents you with big opportunities to start making money with very little and risk free investment. On some occasions, the only thing you will have to invest is your time. I know that there is a lot of scam on the topic and trading securities can often get into this category, but it should not. A lot of famous investors made their way to riches by trading stocks, commodities or other securities. Although, there is too much ‘false experts’ in the field, it does not mean that nobody can earn nice cash there. I remember entering one of financial markets ten years ago and blowing up all of my deposit in one month. It did not feel too nice. I gave the thing up. However, after a few months seeing some technical patterns in one of the most famous securities I decided to give trading another shot and I was successful that time. Lots of time has passed since that time and I have seen good and bad times. Today I am still convinced that trading is one of the best ways to make money. 

If you are ready to trade Forex, futures, indexes and stocks I recommend Etoro and Instaforex brokers. 

How to become a profitable trader

As any other profession this one requires a lot of time of study, practice, analysis, making mistakes, developing your own trading systems and style. I will try to look at some of the key points that are necessary in order to be a profitable trader of any financial market. I have said a number of times that anyone who invests a few hours every day for two years will eventually become a pro in the field. I know that it sounds like a lot of work, but if you think that you can make big money without investing your time in it you are a victim of wishful thinking. 

Understanding specifics of a market

Firstly, you should analyze specifics of any given market. You have to know what kind of orders you can use (long, short, limit, stop and etc.), how big leverage you can use, how long you can keep your position, how much you pay for rollovers, whether you earn interest or it is deducted from your account and a few other things. 

Importance of a good trading system

Secondly, you have to develop a few trading systems that you can apply under specific market conditions. I would advise you to start with one trading strategy that you could use from one time a week to one time per month. You should not trade much in the beginning and you must use only the best opportunities that give you the best risk/reward ratio. You should always target to make (at least) twice the amount you risk. These profit/loss odds are minimum if you want to have profit long term. I would also advise to concentrate only on long term and mid term trends (swing trading) without going into day trading, to say nothing of scalping and other similar techniques. 

Follow your trading plan

After you have developed your own trading system you should think about a plan how you are going to trade and then follow the plan diligently without exceptions. A plan should include quite a lot of things such as: intervals of your trades (how often you are going to trade), technical levels (support and resistance), fundamental news releases (whether you trade those or you stay out of the market), possible profit targets and definite stop loss levels and a few more. 

Be a disciplined trader

Disciplined trading is one of the keys to success in financial markets. You may have all the other necessary things, but if you are not able to discipline yourself and control your emotions, such as greed and fear, you will not be able to survive in the game, to say nothing of making profits. When traders stop following their plans they become gamblers that go into market at the most unfavorable situations expecting that somehow they will get profitable trades. 

Learn to control risk

Risk management is yet another very important point for anyone interested in trading online. A lot of traders would survive and eventually make nice money if they only risked less. But they risk thirty or even fifty percent of their deposit on a single trade and they are completely wiped out of the market. Again, if you are a beginner, I advise you not to risk more than two percent of your account on any given trade. This will help you to survive some bad times when you fail to catch profitable trades. 

Become a master of technical analysis

Understanding technical analysis is another very important thing if you are going to be a swing trader. Support and resistance levels are probably the most accurate tools of technical analysis that will help you to choose where to enter and exit the market and where to place your stop loss orders. As markets spend most of the time in ranges these levels become even more important as securities tend to range between support and resistance levels throughout the year, with very few exceptions when breakouts occur. That’s why you need stops. 

Develop your own trading style

Lastly, as you grow as a trader you might add a few more trading strategies into your arsenal and develop your own trading style. Markets change. They are not in ranges all the time. Trends do start! Breakouts do occur on weekly basis and you might think how to take advantage of that by developing specific trading strategies and a plan for trading these situations. 

Tip: Be patient. You will be profitable if you do not give up. 

If you are ready to trade Forex, futures, indexes and stocks I recommend Etoro and Instaforex brokers. 

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.