How to learn online trading without putting yourself at risk
As mentioned several times in this guide, online trading is a very dangerous business and every trader is mostly extremely careful about doing it. The internet might be full of fairy tales about people getting rich by buying stocks or commodities, but that’s just not how it works.
In real life, people invest time and energy to become more knowledgeable about trading terms and techniques, as well as certain strategies. Sure, there are some extreme cases when people do get rich in an instant but you have to remember this: their success was purely based on luck and chance. Online markets are unpredictable, something can go wrong at any moment.
So, instead of rushing in with all their resources, traders take their time to get some answers to these questions: What is online trading? How does it work? What do I want to achieve by trading? Are my chances of getting rich real? The internet is full of answers to those questions - you can read books, guides, and tutorials and gain some knowledge. And the last two questions depend on your mindset.
Here are some tried and tested attitudes towards online trading:
- Your chances of getting rich instantly are very low;
- Even if you get proper knowledge in online trading, the risk-factor doesn’t go anywhere - being safe and careful is always a good idea;
- It’s better to take things very slow and do online trading step by step. This means constantly checking the market, as well as political news, making a long-term budget with smaller bits for single trades, and just not expecting something unrealistic to happen overnight.
In short, the biggest factor in successful trading is your mindset and what your expectations are. Then come the knowledge and experience. But again, even if you’ve taken various tutorials for Forex trading for beginners - or for other markets - and become quite sophisticated in it, the chances of losing money are still quite high; even experienced traders can easily lose all their money because the world of online trading is very unstable. That’s why you need to be very careful about doing it.
Online trading - one of the main forms of financial exchange
Online trading is one of the types of financial exchange that has millions of users around the world. And it basically works this way: people speculate prices of different assets to get a payout. Usually, when the prices are low and starting to increase, traders buy assets, and when the prices are high and start do decrease, they sell them.
Some of the most popular assets in online trading are currencies, commodities, cryptocurrencies, stocks, bonds, and derivatives. All of them have their own users - some people prefer currency trading, also known as Forex, while some - stocks, or any other asset.
One thing to keep in mind is that online trading is highly speculative and doesn’t work for anybody. Some traders find it useful to get knowledgeable in it and then start trading, but even then, it is possible to lose funds.
FAQ on trading online for beginners
Is online trading for beginners safe?
Not at all. As mentioned in the guide multiple times, online trading is a very speculative business that frequently leads people to financial hardship. You might be hearing stories about successful online traders and how they became millionaires. And many of them are true.
However, there are even more stories of unsuccessful traders. And it can be attributed to many reasons: they might have been inexperienced in trading, maybe they rushed a little bit too much, or maybe the market behaved unexpectedly. The point is, there are a lot of factors that can work against you and being prepared to face them is usually a good idea.
How to start online trading?
Starting your own online trading career isn’t exactly difficult. There are various methods that you can use either separately or in combinations. The easiest and most secure way is to start educating yourself first, gathering all the information about the market, assets, and terminologies.
Another method is starting to trade straight away. However, this might be a bit risky and even difficult, that’s why you can do small-scale trading by putting the least amount of resources at risk.
Or, you can combine the two methods and educate yourself with different materials while also trading online. Now, some people have been successful at one method and some at another, there isn’t one universal way - a very popular strategy is to try everything and see what works best for you.
What are the steps to start online trading?
Many people can agree that online trading can sometimes be a very intimidating process because it has so many individual elements and factors to take into account. And while every trader has their own story of how they stepped into this world, one thing is for sure:
You need to have a proper mindset. Keeping in mind that it’s probably going to take a while for you to get some significant results will prepare you for almost everything in this field.
Then you need to decide which type of trading is right for you. Is it stocks, commodities, or anything else? Knowing the market type can make it simple for you to get more educated rather than reading materials about every asset type.
Then you can make plans about when to trade, which platform to use, how much resources to spend, and more. Going step by step is usually a good strategy for staying focused and not getting overwhelmed.
How to learn trading skills?
There are many ways of learning to trade to become good at it. A more traditional way would be to get a university degree in economics or finances. And while it takes a lot of time to complete your studies, you can actually get some valuable knowledge that can easily translate into online trading.
However, you can also get trading skills by searching through the internet and finding various materials about this subject. You can actually find a lot of valuable books and tutorials that can help you gain some basic and even comprehensive knowledge. But research about trading can be a bit long and tiring.
What are the different types of trading?
Trading is a very diverse financial activity and unites various trading types in its catalog. The most popular types are:
- Forex - trading with foreign currencies and taking advantage of differences between their prices;
- Stocks - trading with company shares that change depending on the prestige and success of the company;
- Commodities - trading with gold, silver, oil, and other raw material that can be found on our planet;
- Cryptocurrencies - trading with digital currencies like Bitcoin or other cryptocurrencies.
- Bonds - lending the government some funds for future payouts
- Derivatives - trading on credit
There are, of course, other types of trading like real estate, and many more. In fact, people can trade with any asset that they have. It’s just those types that are considered to be the most popular.
What changes the prices in online trading?
Since online trading is this complex thing with various elements in it, the factors that drive the prices are also diverse. Depending on which type of trading you’re doing, global politics, economy, and even culture can have a massive influence on prices.
For example, in Forex trading, the monetary policy of a country can have a big impact on the exchange rates. This, in turn, can increase or decrease the differences between the buying/selling prices and translate into payouts. When the goal of a trader is to learn how to trade online, they often look into how governments manage their monetary policy, because it helps predict future changes.
What are the risks of online trading?
There are many cases of safe online trading stories, but it’s mostly due to a lot of luck. There are many dangers associated with online trading. The first and most basic one is the lack of experience. Taking things slow is not something to be ashamed of, in fact, it’s something that the most successful traders did back when they were just beginners. Once they had gained the knowledge they needed, they started to increase the risk of their trades, but before that, almost nobody dedicated all of their resources at once.
But even if you’re experienced and have gained enough knowledge in this business, there are still some possibilities of market failure or crisis. So, staying attentive and keeping an eye on every major development is a very common practice for successful traders.