Online Trader: all our tips for fast learning in 2022

The explosion in the number of opportunities available for making profits on the financial markets has led to the emergence of new investor profiles. Far from being professional, these would-be traders know, for a relatively significant percentage, a rather unfortunate fortune with inevitable losses of their capital. Several reasons are at the origin of their failures: lack of technical skills, impatience, financial pressure, insufficient basic knowledge, and unscrupulous brokers’ scams.

On our Bestrade.org website we will present all the things you need to focus on in order to trade on the Internet in a long-term and profitable way.

The art of trading: the prerequisites

Becoming a good trader is within everyone’s reach if a certain number of prerequisites are met. These basic precepts aim to guarantee, or at least optimise, the chances of success in the delicate art of trading. Generating long-term gains is not as easy as some brokers might suggest in order to attract new clients. In order to avoid falling into a scam as soon as a trader account is created, here are the prerequisites that we consider essential.

online trader

Understanding financial markets

It may seem obvious to the most enlightened among you; however, a very advantageous presentation of trading platforms could make the absolute necessity to understand what the Stock Exchange and its financial instruments are obsolete. The Stock Market is not subject to the same influences as the Forex market, for example. Depending on the type of stock market products you are considering trading your investment strategy is not the same. Understanding how stock markets work helps you to know which data to analyse. From this relevant analysis it is then possible to place orders with a high success rate.

Choose a type of transaction

As soon as an investor knows where he is stepping, he is naturally oriented towards a type of transaction adapted to the financial strategy he is considering: DayTrader and scalping, long-term positioning, mixed approach. For example, trading commodities (gas, oil, gold, etc.) is envisaged over long periods since the parameters of influence are multiple and have effects over long periods. Unlike binary options, which open the way to transactions over very short periods of time.

Establishing your entry capital

Internet trading is a high financial risk activity. The available financial instruments are for a part highly volatile, i.e. their prices can fluctuate up or down very quickly. This can lead to significant losses, particularly through the use of leverage. Under no circumstances should the initial funds be money that is indispensable to your daily budget. They must also be sufficient to ensure that your investment strategy is maintained. With Forex or Binary Options brokers, it is possible to start small with lower ROI (return on investment) with a guarantee not to lose too much. In the equity market you have to think bigger and longer to expect significant gains. You can put the cursor where you want if you are on a consistent ratio of available capital / applied strategy.

Define your strategy

What is a strategy? Some specialists call it Money Management. The rule of thumb is that you should diversify your portfolio with a balanced distribution of the different elements that make it up. For each traded instrument, an equal amount is invested. You must also keep some funds to cover potential losses without putting yourself at risk.

If you are trading on a long-term basis (which we advise) you should not touch the funds by repeated withdrawals. Each win will result in an exponential increase in profits. If you withdraw every profit, your investment capacity does not grow.

If you are on a more aggressive and immediate strategy (e.g. binary options) then it is possible to withdraw funds as transactions are based on lower cash requirements.

How to choose your online trading site?

Selecting your online broker with care is a fundamental aspect of being able to trade easily online. There are obviously a few criteria to check to increase your chances of registering on a promising platform.

The reliability of a broker

If you want to avoid putting your money in the hands of dishonest people it seems important to make sure that the platform where you create your trading account is serious. Check the customer reviews to see how positive the feedback is. The more positive the feedback, the greater the chance that you are on a great opportunity to trade online. Check the broker’s articles of association to determine if they have obtained all the certifications from the regulatory authorities. For example the AMF (Autorité des Marchés Financiers) is the one that guarantees secure online trading in UK. The same is true on a European scale with CySEC.

The level of performance

You sign up to generate the highest possible profits. A broker’s level of performance is therefore an element to be taken into consideration. Compile all the factual data from the trading site (turnover, transaction volume, etc.) and cross-reference it with the leverage levels offered. Leverage allows you to multiply your investment capacity. Be careful to use it wisely as it multiplies losses on the same scale

Brokerage and management fees are another element to keep in mind. Excessively high commissions or heavy charges for day-to-day operations (deposits, withdrawals) can greatly reduce the real profits earned.

Last point of lesser importance. Pay attention to the minimum entry deposit if you want to limit the risk from the outset.

The tools made available

A trader, even a beginner, has the right to the best technological tools for efficient and secure transactions and investments. What software is the interface based on? ProRealTime? MetaTrader 4 or 5? What advanced functionalities are offered? Stop Loss and Take Profit? These are the technical questions you need to ask yourself. An Internet trading site must include ergonomic tools to make your work easier thanks to high-performance platforms, both in terms of reactivity and analytical qualities

The security of your personal and financial data must be at the heart of your choice. Make sure that the encryption protocols are close or even identical to those used in banks such as 3D Secure for transactions or 128 or 256 bit SSL for encrypted information.

Customer service

An online trading site is not just a place where you are alone. It is also the presence of customer support that plays a key role in your success: answering your operational questions, processing withdrawals, VIP support if necessary. Make sure you choose a broker who offers a highly present customer service, in several languages, and accessible by various means: live chat, email, telephone line. Trading on the Internet is above all a team effort.

The innovative tools offered by the Broker

Some brokers offer revolutionary tools to help you trade online such as Robot Trading. This service is offered by most of the best brokers to manage your asset portfolio independently.

What types of financial products are traded?

How can you trade online without knowing what types of financial instruments are available? A brief overview of what you will come across at brokers.

Financial instruments

The best known to the general public are obviously the shares that make up part of a listed company with an intrinsic value for each of them. This value varies according to various parameters such as its results (profits or losses), its evolution over time (growth or not), its investments and its popularity. Buying a share means becoming a shareholder and therefore receiving dividends if profits are recorded.

Forex has also become an important part of popular culture and among traders. It is the trading of currencies. More specifically, pairs of currencies that compete on the basis of their relative value. Their prices fluctuate according to local and international parameters and economic decisions on geographical areas.

It is also possible to invest in stock market indices which are the conglomerate of many of the constituent elements of the financial markets. For example the CAC40 in UK or the NASDAQ in the United States are stock market indices. Commodities are often included in this group.

Of course, we must also mention the crypto-currency market which has experienced a remarkable boom in recent years. Cryptocurrencies are virtual currencies that are used to buy goods on the web. They have a relative value, often measured in US Dollars (USD). Many countries or institutions have created influential digital currencies. The best known to date remains Bitcoin. Other platforms include Litecoin, Ethereum, Dash, Ripple, to name but a few.

Finally, you will find online trading what are called CFDs (Contract For Difference) which are complex stock market products where a prior agreement has been made that trading will take place on the basis of the difference between the initial purchase price and the sale price at the close of the order.

Market Maker or Trading Account?

These are the two main methods offered to traders to invest in the stock market.

A Market Maker is a site that mirrors the real conditions of the financial markets. A Market Maker broker does not offer investors the opportunity to actually buy financial products. It allows them to quote the difference (in pip) between the opening and closing of the position. The trader bets on a rise (Buy or Pull) or a fall (Sell or Call) in the price of the chosen product. The broker is often remunerated through commissions (spread) on the transactions carried out.

Securities accounts are most often offered by banks or financial institutions specialising in this field, such as asset management experts. A securities account gives access to a genuine purchase of the assets on which the investment is made. It mainly includes shares, stock market indices and other complex products.

The need for training

As with any discipline, it is essential to be trained to optimise your chances of making money with web trading. Several methods are to be studied.

online trader

Understanding the psychology of the trader

This step seems vital to us even before placing the first euro on his user account. Even with an excellent strategy, a solid capital and a knowledge of the fundamentals, when you trade on the Internet, you are a victim of quite monumental pressure and stress. Understanding the psychology of the trader allows you to avoid certain pitfalls:

  • not to close a position in the hope that the economic situation will be even more profitable despite the projected results
  • closing a position in a hurry because suddenly the rate drops sharply
  • seeking at all costs to open new positions, endangering capital, to cover inexorable losses
  • investing too much risk in a very short time for immediate gains

The aim is to guarantee a serene and solid approach to sustainable portfolio management.

Specialised sites

When they are devoid of any commercial interest or partnership with a financial market player, specialised sites, such as Bestrade.org, are the recommended places to learn the basics of online trading. They also provide complete and objective reviews of the different platforms to help you choose the one that suits you.

They bring together general concepts, technical themes as well as real time news and their analysis to help decision-making.

Internal training at the platform

Most online brokers offer their academy in order to give investors the best possible basis to develop a profitable business: FAQ, webinars, tutorials, online videos, live trading, commented news. Step by step, traders receive a progressive learning process according to their skill level. This enables them to develop and improve their financial strategies for increased profitability.

The demo account

Even if it is often one of the options developed by brokers, we wanted to make an aside on the importance of the demo account. Especially for beginners. In real conditions, the platform makes available fictitious (often renewable) capital that can be used on different financial products as if you were using real funds. The overall functionalities are identical. The catalogue is complete enough to try your hand at trading virtually in complete security.

This is an important step in ensuring longevity in the financial markets by understanding the why and how of the Internet stock exchange.

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