Online Trading: Tricks and Secrets
Would you like to know the first and most important tip to avoid losing large sums of money, blowing your trading account and to help you trade responsibly?
Never risk, or invest, more than 2% of your capital per trade!
Although investing in stocks, crypto currencies and the currency exchange markets, is extremely popular and simple, and anyone can do it, to become successful, it’s important to always use a strategy that guarantees a higher percentage of profit, with less risk.
In this article, discover the hedge of successful traders, the key points to help you find the right CFDs broker and other tips on online trading to become a better trader.
We're not talking about abstract mathematical methods and tricks that are difficult to understand, but rather easier, more simple systems that make online trading a rewarding experience both financially and psychologically.
Online Trading: Tricks and Secrets
And here is the second tip. Anyone interested in becoming successful with online trading, should not give in to the temptation of easy and immediate gains, but think that at the base of good investment there is always studying, method and experience.
What are the Tricks in CFDs Trading?
Online trading has opened up numerous avenues of earning opportunities. Who doesn't like an extra source of money to supplement their income? Online trading is the perfect solution for all those who are looking for an easy profit or who are simply fascinated by the ever-changing world of finance.
Getting started in online trading is really easy and the only tools you need are a computer and an internet connection, or even a smartphone or tablet. Many people are already earning money by simply investing online in stocks, taking the same route as professional traders who trade on the floor of several stock exchanges around the world.
It is here that we see how online trading for retail investors has completely changed the game.
Thanks to several digital technology capacities, all those operations that used to be cumbersome, with phone calls forward and backwards, to complete an order, have been made extremely fast. This incredible speed, offered by the digital technology, allowed for the development of other investment practices that can now be implemented with ease.
A lot has been written of the subject of online trading. Often, beginners without any financial knowledge, and that are entering this world for the first time, do not know which asset to bet on, which asset should be bought or sold. Online trading also makes it possible to make investments without committing to a purchase and having a physical delivery.
This is why the main type of online trading was created: CFDs (Contract for Difference) trading. CFDs made it possible, for even the most inexperienced traders, to make a profit without the financial muscle of an investment firm. But, of course, it is paramount that anyone entering the online CFDs trading world has the basics to succeed.
On the contrary, those who follow a more rational and less impulsive path, know that with online CFDs trading it is possible to earn money, by taking risks, and that in the long run, this attitude is able to give great satisfaction.
The secret to be successful in trading is to not fall into the temptation of earning a lot of money immediately. Instead, to achieve success, you should follow a medium to long-term strategy that leads to profits gradually, taking into account that along the way you may also fall into temptation.
In order to training yourself, and steering away from the impulsiveness, it is important to learn from past data. That is, using the technique of dissecting economic and financial data for the day, on the basis of what happened in the past.
To simplify, we are talking about trading strategies involving the use of the Technical Analysis and Fundamental Analysis concepts, both of which are the basis for successful online trading.
Another trick for earning money with online trading, is to resort to tactics that provide a good knowledge on the asset that you intend to trade. This implies a type of analytical job that is expressed in a meticulous and careful collection of historical information of that asset.
Technical and Fundamental Analysis: Knowledge is Power
To understand well how an instrument behaves, we recommend trading it on a demo environment, analysing its price patterns, what fundamental factors make it move up or down, and not following a trend of the moment.
For example, when investing on major companies’ stocks, stocks that most of the time are trending up, like Google, Amazon or Tesla, it is never clear the historical situation of this company, or easy to study the active balances and economic perspectives, in order to preview the future course of these stocks.
Collecting all this information, studying and analysing the data of a companies’ balance sheets and its growth prospects, is, nowadays, a rather simple operation to carry out.
With the internet, it is possible to gather so much more information compared to the past, where this type of information was reserved. Plus, all the major trading brokers have an analysis section on their site created for this purpose.
Economic Calendars and High Impact News
Another valuable tool for trading Forex CFDS online is to use an Economic Calendar and follow any political news to minimise a price guess and to make more precise predictions on the possible trend of an asset’s price.
Seasoned traders strongly advise beginners and inexperienced traders to use this forecasting tool. Thus, traders should pay the maximum attention to all the geo-political, economic and natural factors, like wars, inflation rates, or even natural disaster, that can have an impact on the financial markets, such as the price of oil, price of gold, the value of one currency versus another, etc.
For example, the price of oil is often influenced by several factors, and which in turn has repercussions on entire economic sectors. Oil is also at the root of many wars around the world, and is a commodity capable of upsetting the civil and economic coexistence of the entire planet Earth.
Another great example of how natural events can in some way influence the financial markets and suggest a trading strategy is given by climatic factors. Floods, natural disasters, earthquakes, droughts, etc., are important factors, affecting the price of some soft commodities such as cotton, coffee, cocoa, wheat, etc.
Practising on a Demo Account
With a demo account, retail investors have the opportunity to practice and experiment with strategies, in a 100% safe environment. They can trade without incurring any risk, because only virtual money is used in a demo account. The virtual funds are provided directly by the platform.
Normally, a demo account mirrors the same results of a real account, the only difference being that traders using a demo account will not take any risks.
Usually, all CFDS brokers give the possibility to try out their pricing model and to practice by opening a demo account. Some brokers offer the demo account limited in time, for example 30 days, while others offer demo accounts for unlimited periods, only requiring that users sign in.
And of course, with a demo account, no deposit is required to activate the account and enabling trading. To sum up, the advantages of using a demo account are:
- Can be opened for free and no initial deposit is required
- Traders can practice freely until they get a full understanding of both the trading and the platform itself
- Investors can trade using virtual money, therefore, trade without incurring any risk
- Normally, trading with a demo account means simulating the same operations as if executed on a real account
Once you have gained a lot of experience, tested a winning strategy and feel more confident, you can decide to switch to a real account.
But, bear in mind that trading with a demo account and investing with a real account are two completely different ways of trading, especially from the psychological stand point.
This is because when trading with a demo account, traders will have a different approach in how funds are managed, because there’s the psychological factor telling us “it’s only funny money, there’s nothing to lose”.
Comparatively, when investing real money, your savings, you will surely have a different psychological approach, and you will have to deal with different emotions.
For this reason, it is recommended to use the demo account safe environment for a limited period of time, like 90 days, and then switch to trading with a real account and start (always) trading with small positions and with small budgets.
So, it is important to learn how to control emotions to take advantage of any type of situation, and consequently to limit your losses.
A good way to do is via the RoboForex broker. They offer, what could be the best real account conditions for beginners. Cent accounts. With a RoboForex cent account, even with a small deposit as USD/EUR 100, traders can practice their trading skills and test their trading strategies in a real market environment, with limited risks.
With their exclusive cents trading account traders can have the real feel how the market behaves and practice on a real-time, real-conditions environment without risking a fortune.
Switching to a Real Account
When a trader decides to switch to a real account trading, the first thing to consider is to look for an authorized and regulated CFDs broker. A regulated broker gives the guarantee to traders that they can invest in complete peace of mind because their funds are highly protected and safe. The main regulators entities for CFDs brokers are:
CySEC (Cyprus Securities and Exchange Commission): CySEC is a commission that regulates the financial markets in the European Union. It complies with the European MiFID regulation and members of the CySEC Commission (the FX brokers) have to offer a mandatory ICF (Investor Compensation Fund) of up to €20,000 to retail investors, protecting their funds in case the broker is unable to meet its obligations.
FCA (Financial Conduct Authority): The FCA is the financial regulatory body of the United Kingdom. It also complies with the European MiFID regulation and members of the FCA (the FX brokers) have to offer a mandatory ICF (Investor Compensation Fund) of up to £85,000 to retail investors, protecting their funds in case the broker is unable to meet its obligations.
How to Choose the Right CFDs Broker?
A reliable CFDs broker must offer and possess the main characteristics that can be used to distinguish them from the hundred brokers out there. The most important, of course, is regulation and safety of funds.
Regulation: A reliable broker must above all be registered and regulated by a top regulator, preferably a tier-1 regulator such as CySEC, FCA or ASIC (in Australia). Be careful with brokers only registered in places with lesser restrictions (and most of the times not regulated at all).
Demo accounts: Also, important, the possibility to open, in addition to real accounts, a demo account in a totally free way. The demo account must mirror exactly the real account environment. There are several brokers offering demo accounts with much lower spreads, and swap rates on their demo accounts, compared to the real accounts, just to attract new customers, so, be careful.
Education: A good CFDs broker must also provide training for both beginners and experienced traders by offering free training material, mainly trading strategies webinars, FX trading courses or eBooks, and daily market technical analysis.
Instruments: A top broker must be able to offer a good portfolio of trading instruments, divided in several asset classes. Be careful with brokers offering only 30 currency pairs for trading.
Pricing: Pricing is one of the most important aspects when shopping for a CFDs broker. The reliable broker should openly and clearly display, to start off, on their webpages, their spread policy, the swap rates for each individual instrument and the trading commissions, if applicable, for every instrument and every operation.
Trading Platforms: It is also important that a broker offers the right trading platform for you. Some traders prefer the classic MetaTrader environments, some might prefer the cTrader platform, or the broker’s own proprietary platform, such as IG Trading.
Website: Simplicity is also fundamental and crucial for a trader’s success. By simplicity we mean the ease of depositing and withdrawing funds, or to move available funds between real accounts. Also, a final note on the broker’s graphical interface. Is the website easy to navigate? Are all the tabs easily identifiable? Where can you read the latest market comments? And so on.
Customer support: And lastly, but not less important, customer services. Does the CFDs broker offer a helpful customer service where traders can ask questions related to trading and their accounts? Is the customer service efficient and answers timely? Does the customer service support team speak your language?
Scams do exist in retail Forex, with several CFDs brokers, which can carry, ultimately, the loss of all your savings. Therefore, do not fall into the error of believing that all CFDs brokers are the same and that all brokers offer the same tools and services. They do not.
Thus, it is advisable to choose with caution. On our Forex Brokers page, you can find a list of all the top brokers that we can recommend.
Beginners should understand, and experienced traders can confirm, that to earn with online trading there is no single strategy, no holy grail, but instead it’s only possible by applying different techniques and systems.
Traders following a more rational and less impulsive path, know that with CFDs trading it is possible to earn money, by taking smaller risks and managing the available trading funds properly, and that in the long run this attitude is able to yield great satisfaction.