What does the concept include? “online trading” in Russia? How to choose a dealing center? Who teaches fundamental analysis of online trading?
1. What is online trading?
The exchange was initially created exclusively to conclude profitable deals with goods, raw materials, securities, currency. However, soon experienced businessmen discovered, that you can make good money by changing quotes.
Interest in the stock game increased after revealing some patterns of price fluctuations. As it turned out, market is not chaos at all, and orderliness.
Charles Doe – first magazine editor «Wall Street» – noted in his articles: «Market movement driven by trends». Ralph Elliott in «Theories of waves» characterized pulsed and corrective waves, described patterns, inherent in all financial markets.
Based on these and many other works, methods for analyzing market movements were formed. Analysts began to predict ups and downs based on technical and fundamental analysis.
And what did traders do at that time? Speculated. We bought different financial instruments cheaper and sold them more expensive. This is the whole point of trading.
At first, it was necessary to assemble in large buildings for trade – exchanges. Players today no problem trading houses over the Internet.
Forex Market, where is the currency sold and bought, created immediately on «interbank» — trade is conducted only through the information network.
What is the essence of this type of trade? You are sitting at home, look at the charts and send orders to the broker, at what price to buy, what to sell. If you base trading decisions on analysis, not intuition – definitely go plus.
2. What are the benefits of online trading? — overview of key benefits
Online trading opens up significantly more opportunities for novice speculators, than the stock market game on the trading floor.
Let’s analyze them.
Advantage 1. Trading on the exchange with a small amount of funds
Today to start trading enough to have a minimum deposit. First of all, it concerns the Forex market, where traders use leverage.
I wrote about the essence of leverage earlier in the article «Exchange Trading for Beginners» — I advise you to look. Thanks to this wonderful tool, it is enough for a beginner to invest $250-300 and start speculating for real money.
Advantage 2. High application rate
To open a transaction when trading through a network, I just push the button. In the exchange building it will take more time, negatively affect earnings.
High application speed is especially important when trading at short time intervals, when you want to make money at minimum price increases. This method is called «scalping».
Applications for opening a transaction are allowed not only at current prices, but also for future, not to miss a profitable reversal of the current trend or a powerful impulse.
If i guess, that the dollar will rise in price and after that it will collapse sharply down, I set a pending bounce order in the terminal called «Sell limit».
As soon as the course jumps, automatically open a deal to go down, even if I’m not at the computer.
If the dollar will really fall – i will earn, if it goes up – lose money.
I wrote in more detail about the opening of trading positions in the article «Trading». I gave there table with the characteristic of 4 types of pending orders and advised to take her note. Peep into the material, if you haven’t done it before.
Advantage 3. 24 hour access to market information
In the trading terminal constantly the latest news – you will not miss a single important event. Qualitative analytics available on brokerage firms’ websites, training programs.
Awareness – the main weapon of the trader. Trading without an idea of market processes – the right way to drain the deposit.
Do not confuse access to market information with the ability to trade. Forex trading is really available around the clock: the market does not work only on Saturday and Sunday, as well as on international holidays.
The stock market runs in sessions, it is impossible to open transactions within 24 hours. Even if you give a trading order to a broker, it will be executed only at the time of the start of trading.
3. How to make money on online trading — step-by-step instructions for beginners
Beginners are often scared of one word «trading», because the stock game process seems complicated and confusing.
In fact, everything is not so scary – here simple plan, where you can easily reach the pinnacle of success and become a professional speculator.
Step 1. Choose a broker or dealing center
Choosing a broker must be approached responsibly, for the timeliness of discovery depends on the quality of his work/closing of trading positions, accuracy of price movement information provided.
On a note
In Russia, most brokerage firms operate unofficially. Companies registered in offshore zones – on distant islands, less common in European states.
They correctly execute trade orders and «draw» correct quotes on the chart.
Gray forex brokers go bankrupt especially often, what cannot be said about stock market dealing centers. Cause – leverage.
If a trader overloaded his deposit and left the transaction not a weekend, during non-business hours of the exchange, the market may turn around. Result – negative balance on the trader’s account.
It is not so easy to recover a loss from a speculator, if the trade was not legally registered. therefore the broker will have to pay own money.
Step 2. Install special software
Ideal for Forex Trading – terminal. Special programs created for stock market, but their essence is about the same. Some brokers do own trading platforms, but I didn’t see particularly good ones among them.
Usually brokers hold webinars or record video tutorials on work in a trading platform – you need to see them first of all.
For successful trading, you need not only to be able to click on buttons «Buy» or «To sell», but also use technical analysis tools correctly, customize the display of graphs and t. P.
On Forex, each currency has two prices. Bid — directly its market price, Ask — price, set by the broker. Difference between them – spread – broker’s profit. In MetaTrader4, the Ask line is never shown by default.
As a result, newcomers open deals on exotic currency pairs, and a couple dollar/ruble, and then they are surprised, where are the losses.
Ask line is not visible and beginners do not pay attention to huge spreads, which the broker takes, when executes transactions on named financial instruments.
Sometimes useful download all price history, in order to see the whole picture of market movements – keep that in mind.
Step 3. We open a trading account
Trading account opens on the site of a brokerage firm after registration, either in the trading terminal. Money is transferred unambiguously through the broker’s website.
Different companies have their own requirements for trader accounts. First of all, the requirements relate to the deposit.
On a note
Pay less attention to the minimum deposit, how much on lots, which are allowed to trade. If you can speculate a minimum lot (0,01) for successful trading you need about 250$, if minimum – 0,1 lot – 2500$ and so on.
Traders often start trading with smaller amounts, but it is always an increased risk. According to the rules of money management, the risk in each transaction should not exceed 2% from deposit.
Step 4. Choose a trading instrument
When an account is open – go to trade. In almost every article I mark, that real speculation should be preceded by long practice on «demo». Invest only after reaching a stable profit.
To start online trading is necessary choose type of financial instrument. On the Forex trading this is a currency pair, in the stock market – security paper, for example, a Gazprom share, on commodity – various assets, starting with wheat and ending with coal.
Step 5. Analyze the market
If you plan to trade in the medium or short term, that is, do not keep open transactions for months, for success enough technical analysis. View Support and Resistance Levels, indicators, Fibonacci lines and others.
With long-term trading, technical analysis is clearly not enough, have to delve into fundamental analytics. It’s not that hard to do, as it seems.
On a note
I recommend watching the channel regularly RBC, so that «be in trend», especially programs, concerning market analysis. To understand everything, what analysts say, need basic training – you will find it at three companies, which I will describe below.
note, I do not advise you to listen to five minutes of smart uncle and run to the bank for dollars, like my friend. You have to understand, what processes are happening on the market, ponder, enable logic.
Analysis always carried out as part of a strategy. Good strategy explains, where to buy and where to sell, provides an action plan for anyone «unscheduled» the situation.
Here is a small classification of existing strategies — check out.
Types of Trading Strategies
|№||Classification sign||Types of strategies|
|1||By trend type||Bear Trading/bullish trend and sideways trading|
|2||Following the trend||Trend Trading, against the trend|
|3||By duration||Short term (any time frames less than an hour), medium term/intraday (hour — day), long term (more than one day)|
|4||By type of analysis||Strategies for technical and fundamental analysis|
|5||By subtype of technical analysis||Strategies based on graphical and indicator analysis methods, candlestick patterns, Elliott waves et al.|
Not all are listed here. There are strategies, which stand apart: gap trading methods, news and t. P.
Step 6. Bidding
When the market is analyzed – open the first deals, set Stop Loss and Take Profit – trading orders for getting rid of losing trades and timely profit taking.
Step 7. We make a profit
You will see the profit in the account, as soon as she appears. Paying attention, brokers also work not for free. Forex brokers charge for executing trade orders spread, stock market brokers – commission.
Spread charged once – when opening a deal, commission – and at the opening, and when closing a position.
4. How to protect yourself from risks when trading on the Internet — 4 practical tips
Trade — it is always a risk.
Follow the tips below — it protects you from stress and waste of money.
Tip 1. Conduct a fundamental analysis of the proposed products
Even if you trade based on technical analysis, have an idea of the fundamental processes, occurring in the market, still necessary.
The economic calendar periodically publishes world finance news. The dollar is very affected by such an indicator as «nonpharm» — number of jobs, created outside agriculture.
Nonfarm publication causes price spikes. If you opened a technical analysis 10 minutes before the news – high probability of flying out on Stop Loss. And to protect against loss, just view the economic calendar and stay informed.
Fundamental analysis especially important for long-term traders, holding open deals for weeks.
Tip 2. Take online trading courses
Trade without training and market analysis – stupid and risky. You need not only build basic skills, but also constantly grow – read literature, attend seminars of professional traders.
Tip 3. Start trading with small amounts
Even if you have successfully traded on a demo account, don’t invest in big money trading right away. Emotions when trading «on candy wrappers» and for real money – not the same thing.
At first, watching open trades, you will see a bundle of money before your eyes, which is growing, then decreases. This is a murderous feeling, violent tension.
But one thing, when you have 100 bucks in your account, and you will return them with a salary next month, and another – $10 000, which is unknown when it will be possible to return.
Tip 4. Fix the loss
At the opening of each transaction, set Stop Loss. If the market goes against you and falls to the level of a protective order, broker will automatically close the deal – lose some of the money, but do not merge the entire deposit.