How Online Trading Make Money with the Right Knowledge and Expertise
Perhaps, you might be wondering if it is possible to make a living by trading stocks. The scenario of resigning from your regular job and supporting yourself by online trading seems fascinating. To others, this idea is impossible but there is really money in online trading and it only takes a leap of faith and a firm decision that you’re going to earn a living from the stock market.
Investing is a niche and to be with online trading, you need first to understand the concept of a “stock”. It is a “share” in the ownership of a company, hence when you are buy a share of stock, it means that you are buying a “piece” of a company. Thus when you invest, you will be a “shareholder” and are entitled to a piece of the company’s profit.
The stock market on the other hand is where traders buy and sell shares like the US Stock Market. To simply put, the stock market is like any real market but instead of goods, traders buy and sell shares (or ownership) of companies and as long as you have the drive and perseverance, online trading works for you and can potentially be profitable.
Think and you shall become. To get started online trading, you will need a computer, a hi-speed internet connection, trading software, a capital and disciplined strategy. You should think about the financial markets, which would you like to trade and at what time? Here is an overview of the markets and their difficulties and which would allow you to invest in virtually all markets at low fees:
- Forex (Foreign Exchange) – this is the most liquid (easy sell or easy to be converted into cash) market in the world and the volatility (strength of the price movement) is low. This kind of online trading best suits beginners with a minimum investment capital. You can see very good trends and also react to economic views.
- Stock index – it’s a market of different stocks represented in an index. Almost all countries have an index (measures a stock market) and this type of market makes use of online trading via CFD (difference) contract which is also good for beginners.
- Cryptocurrencies – they are highly volatile and a type of online trading that contains a higher risk than the other markets. You should consider whether you invest here since the movement of this type of market is irrational and incomprehensible.
- Stocks– a kind of online trading which is also traded easily with an online broker. You can even speculate in falling prices with a short pole and shares do not have to be exceedingly liquid.
- Commodities – they are driven by economic development and political decisions sometimes influence prices. This kind of market can also be made via online trading through CFD and long and short leverage (the control of what happens).
Choosing A Good Trading Platform and Online Broker
Choosing a good online broker plays a big role in your earnings in online trading. Sometimes beginners choose the wrong provider with high fees which can reduce your profit a lot. In short-term online trading, fees are important issues.
On the other hand, the trading platform should have a stable function. The broker should have no connection interruptions and must give you a good market execution in online trading. And also, the broker must have an official license for the financial markets otherwise without a license, a broker is considered a bogus or scammer.
Deposit and Withdrawal with the Trading Account
And now, you are ready to invest real money. Do you feel safe in online trading? If so, then you can make your first deposit to the trading account.
You have to use popular and established payment methods such as bank transfer, credit card, online banking, PayPal…among others. Make sure that the account must be fully verified before depositing. Your broker will explain fully all the necessary steps.
Calculate Risk in Order to Earn Money Sustainably
Here now comes the most important part in online trading – the risk of a trading transaction which must be calculated thoroughly. It is always modified by the position size and the associated loss.
So how much money should you invest in each trade? For good online trading, a trader should use 1-2% of the total capital in each position and the risk varies according to preferences. Sensible risk management of 1-2% of the total capital is a good choice and it’s very important not to be discouraged by losses but continue to follow your concepts.
Create Your Own Trading Rules and Strategy
In online trading, you also need which trading approach you would like to pursue. There are numerous trading strategies for the markets and this includes a good analysis and taking into consideration important market moves.
Trading rules reflect the approach in online trading on the market. And it works well if the trader sets his own rules and adheres strictly with it. Emotional action must be omitted because online trading is not for the faint hearted as it involves a risk.
Continuing Education and Knowledge
In online trading, continuous learning is very important. Always equip yourself with new information in trading as it could help you earn money. The knowledge can be broadened by means of webinars or daily analysis by professional traders.
Online trading does not necessarily have to be difficult, just a simple law of supply and demand. Having clear set of rules is crucial, so don’t become stagnant but always be prepared with correct execution of a trade step-by-step.
How Much Money Can You Earn with Online Trading?
When it comes to online trading, profits are unlimited. However, getting rich with speculations also has problems. The position size (of your trading) and risk involved play a big role since the higher the risk, the higher the possible profit.
The most traded markets are best complemented for big capital, as they are the most liquid. In order to earn a lot of money in online trading, you have to bring enough capital with you. You need a lot of money for a lot of money.
Earning money with online trading is possible but you should be aware of the risks. It is one of the most equitable transactions in the world as buyers and sellers barter at certain prices. Earning money with just a few clicks on your computer is really inviting but you have to stand up to other traders in the end.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.