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How to Make Money Trading Online?

Make Money Trading Online
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Trading is characteristically associated with buying and selling stocks, commodities, currencies, bonds, or other financial securities over shorter periods. This is primarily to make profits from the short-term movements in prices of these securities. So, traders essentially take advantage of volatility. To understand the basics of trading and investment and to know how to start trading online and make good money, continue reading this article.

What is Online Trading?

Online Trading has become increasingly popular in recent years. It’s easy to set up an online trading account and start trading financial securities and assets. It made trading available to everybody with a computer or smartphone and the internet. Platforms provided by brokers offer all kinds of financial instruments including stocks, commodities, bonds, and futures.

To make a trade online you need to do the following steps:

  1. Choose a trading platform and open a trading account.
  2. Choose the financial security and asset you want to buy by doing all the needed research and analysis.
  3. Look up the price and wait for the proper entry price.
  4. Decide how much you want to spend.
  5. Finalize the deal when you’re happy with the quote.
  6. You can then track the performance of your investment.

Styles of Trading:

Scalping: It usually refers to very short-term trades, anything from a few seconds to several minutes.

Day Trading: It refers to trades that are typically opened and closed within a day. Day Trading usually lasts minutes or hours.

Swing Trading: It is a trade that lasts days, weeks, or months.

Position Trading: It is a long-time trade that may last months or years. It is usually considered an investment and not a trade.

Types of Trading:

Trading can be a very lucrative investment opportunity. However, it is also a very complex and risky business. If you are not fully aware of the risks involved, you could end up losing your entire investment. Before starting trading, it is important to understand the types of trading and the basics of each one of them:

1. Trading Stocks:

It means that you buy shares from a company. The value of shares differs from one company to another. The more a company grows the more the value of your shares in it grows. Nearly, all the big companies like Apple, Google, Facebook, and Coca-Cola sell shares.

2. Trading Commodities:

Many platforms and exchanges allow you to trade commodities like Gold, Silver, Iron, or anything we use every day. They affect the market of stocks and currencies according to the fact of supply and demand.

3. Trading Currencies:

Trading currencies means buying one currency and selling another. There are two types of trading currencies:

a) Trading Forex (Currency Pairs):

Forex (foreign exchange) is the major global market for buying and selling global currencies like USD, EUR, GBP, JPY, and any country’s currencies. It is the biggest trading market in the world as all the banks and investment companies are active there. The FOReign EXchange market is open 24 hours a day, five days a week.

b) Trading Cryptocurrencies:

There are a lot of platforms that allow you to trade cryptocurrencies 24 hours a day, seven days a week. They are often traded on decentralized exchanges and can also be used to purchase goods and services. Bitcoin, Ethereum, Litecoin, and other cryptocurrencies are often considered investments, and their values can fluctuate.

4. Trading Derivatives:

Derivatives Trading enables you to trade in any market like Stocks, Commodities, Forex, or cryptocurrencies, but with conditions. It gives you specific options and you’re supposed to choose from them. You decide your capital, your profit amount, the duration of the deal (when to open and when to close), etc.

a) Binary Options:

Trading binary options is a form of speculative trading that allows investors to make money by predicting the direction of price movements in a particular asset. You can trade on any kind of assets and currencies by choosing specific options (like capital, open and close time, …)

b) Futures Trading:

Futures Trading is an investment strategy that involves buying and selling contracts for future goods and services. The two parties make the contract and agree to deliver the assets on a specific date in the future for a specific price.

Advantages of Online Trading:

  1. Online trading platforms enable you to trade easily from home. You can work sitting at your home, working on a device with the internet.
  2. They enable you to place take-profit, stop-loss, and other crucial orders so that you don’t have to watch the market 24/7.
  3. Some of the benefits of online trading platforms include the ability to check the status of an order, get real-time stock quotes, and receive news updates on companies you are interested in.
  4. Novice investors can practice with demo accounts to get the experience of online trading. 
  5. The trading fees of online trading are very low.
  6. Transactions can be made much more easily.
  7. You can search for stocks available on different exchanges and decide on the broker who offers the best price.
  8. You can choose a trading platform that suits you among many ones.

Tips to Make Right Decisions that help you Make Money Trading Online:

To succeed in trading, it is important to make wise investments and trading decisions. However, making foolish decisions can make you broke. Therefore, it is important to have a to-do list and a not-to-do list to guide your decision-making.

Here are some tips that can help you be a successful trader and make money trading online:

  1. You should learn how to manage your capital and control your emotions. Don’t be rash!
  2. Before investing, you should sit down and decide how much money you’re willing to invest and how much you can afford to lose. Failing to do this may result in losing all of your investment.
  3. Making money is not so easy. It is necessary to realize that there are risks involved and all investments are risky to a certain degree.
  4. Many times, people lose money not because of bad luck, but because they lack knowledge about trading. Therefore, it is advisable to study thoroughly before investing any money.
  5. If you’re thinking of becoming a full-time investor, you should keep an emergency fund.
  6. Strike a balance between your financial goals & market performance.
  7. Trade in liquid stocks. Liquid stocks have more buyers and sellers, so you’re more likely to find a buyer when you want to sell.
  8. Stay away from highly volatile stocks because they can move in an unpredictable direction and make you lose a lot of money.
  9. Trade in good correlation stocks. This investing strategy involves buying stocks that have a history of moving together.
  10. Follow the trend because moving with the trend is always beneficial for you in terms of trading.
  11. Do some research to make good decisions before starting trading. When doing research you can use technical analysis and fundamental analysis:
  12. Fundamental analysis is the examination of public views and the financial reports of a company to know its health.
  13. Technical analysis is the art of detecting patterns in the rise and fall of stock and using that information to generate profits.

A combination of both these techniques can help a person identify the most suitable stock.

Tips to Choose a Good Broker:

When choosing a broker, there are some very important characteristics that must be sure of. Choosing the wrong broker will reduce your chances of making money trading online. the following are some of these characteristics:

  1. It must have proven reliability. It is better to choose brokers working for a length of time with a good reputation.
  2. It must be very fast in opening the orders.
  3. It must offer deposit and withdrawal methods in your country.
  4. It must offer many methods of withdrawing your profits without delay with minimum fees.

Difference between Trading and Investing:

Investing and trading are two different mechanisms employed to make a profit in the financial markets. Though both investing and trading may appear as parts of the same process for someone relatively inexperienced in the financial market, in reality, the two are far from being similar.

We mentioned earlier that trading is associated with buying and selling financial securities and assets over short periods. On the other hand, investing is traditionally related to buying stocks or other financial securities and assets that are expected to bring returns over a long period of time. For this reason, investors must select stocks or bonds of companies that are expected to grow in the long term.

Conclusion:

As a trader, one of the key things you can do to boost your chances of success in markets today is to approach trading as a business. However, before you can start trading, you need to know the basic understanding and you need a strategic plan that includes short and long-term goals. Trading online is a big opportunity to make money online, but you need to be very cautious as trading without being able to study the market well and controlling your emotions can make this go badly.

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