WHAT IS TRADING ONLINE?
The term online trading refers to the activity through which different products are exchanged in the financial markets: currencies, raw materials, indices, stocks, cryptocurrencies, CFDs, etc.
This activity has gained followers in recent years since, thanks to the development of new technologies, anyone with a computer and Internet connection can practice online trading and operate with any financial instrument.
Of course, if you have decided to take the step and want to become a trader. Then we leave you a series of keys to online trading that you must take into account before starting to operate with real capital.
TIPS FOR PRACTICE TRADING ONLINE
1. In which financial instrument and in which market do we want to invest? It is important that we know clearly which financial product is best suited to our trading needs, that is, if we want to operate in the medium or long term, the shares or ETFs can be better adjusted.
If we want to trade in the short term, maybe Forex or trading with derivatives such as CFDs is better. Financial markets have been expanding over the years.
Currently they can be classified into the following types: currency or Forex; of capital (stocks, bonds); derivatives (CFDs); raw Materials; monetary; cryptocurrencies; mortgages; sure. The best known is undoubtedly the one of actions, the one that most familiar sounds to those who are not specialists in online trading.
2. Training It is not advisable to start practicing online trading without having set aside time to train and train and, above all, to understand the most basic and necessary concepts to start operating. Good training is key not only because it will help us succeed in our operations but also because it will be useful to protect us against possible scams and opportunists.
Knowing in depth the trading indicators or concepts such as leverage, support and resistance or pip and knowing how markets work are essential for any trader. Most brokers offer free webinars and seminars that can be very useful for both beginners and professionals who want to learn about different strategies. They also usually offer free demo accounts.
3. Choose a good broker. What is a broker? It is nothing more than a financial intermediary through which our orders reach the markets. When choosing a broker we must take into account, first, that it is well regulated and licensed to operate in the territory where we reside.
In Europe, the most trusted brokers are those that are regulated under the strict rules of the FCA. Other considerations that must be taken into account are the security of the funds, the spreads that it charges, the trading platform it uses and the customer service in our language and at local time.
4. Have a trading plan. It is a road map in which we will make clear our goal and how to achieve it. It is a set of written rules that we should not deviate to try to avoid spontaneous decisions that can be fatal.
In this way, whatever happens, we will be prepared for any eventuality that may arise and will help us to better manage the risks.
5. Risk management. If we operate with derivatives or currencies, we must know that leverage is allowed. A very useful tool thanks to. Which we can multiply our profit but that we must handle it carefully, since in the same way it can double our losses.
The most advisable thing is to open several small positions and not a large one with a very high leverage to diversify our risk and «not put all the eggs in the same basket». It is also advisable to use risk reduction mechanisms such as stop loss, with which we can mark the limit of losses that we are willing to assume.