Before you actually put on a trade you have to invest a little time into understanding what you want to achieve and the best way to go about it. Anyone who plays poker, gambles or buys and sells things online has basic goals or a STRATEGY. You want to buy something at one price and sell it for another, preferably for a profit. This is the very definition of trading.
Your strategy can be as simple or as complicated as you like, but like most things in life the simplest way is usually the best way. If you are considering trading then your main aim will be to make a profit, the amount of profit will generally dictate how you will trade and what products you should choose.
To get started you need to look at the following 3 points. This will give you a basic idea of what you want to achieve and how you want to do it. Once you have done this you can then follow one of the Trader Maker strategies.
Strategy for making up to $500
If you are looking to make up to $500 then you should be looking at fundamental trading. Look for pieces of news and events that will make the markets move. You will want to hold trades for short term gains and choose fast moving liquid products like FX and CFDs.
Strategy for making over $500
If you are looking to make over $500 then you should be looking at a more structured and long term approach. You will want to hold trades for longer term gains and choose products like stocks and commodities. You would benefit from Technical trading with some background fundamental research.
Trading Approach:
- Do you want to trade...
- Reacting to news and company information?
- With your gut instinct and market trend?
- Sharp price increases and corrections?
- Market information and rumours?
- Changes to government legislation?
- Economic figures and earnings?
- Trade often and take quick profits?
- Do you want to trade...
- Using graphs and technical levels?
- Looking for trend and reversals?
- Using technical tools like Fibernachi levels?
- Open and closing prices and highs and lows?
- Waiting for patterns in charts to form?
- Using candlesticks and other charting techniques?
- Run trades for days or weeks if required?
Your attitude to risk will depend on what you want to achieve and the time scales you want to work to. This generally, but not always, works in conjunction with the FUNDIMENTAL and TECHNICAL types of traders.
LOWER RISK/SHORT TERM
- Stick to single trades and short times scales, hold the trade for between an hour and a day.
- If your opinion is wrong get out the trade immediately. You can always get back in the trade.
- If the market does not react to your opinion wait a short time, if it does not move wait for more information. Take your profits! IF It is it big news you have based your opinion on there will be a big initial move and then retracements.
- Take the profit while it is on the table. Try and be as specific and targeted as you can ie if FORD went bust, sell Ford shares do not assume Volkswagen would also go down.
HIGHER RISK/LONG TERM
- Trade on or more products with a longer term view for days, weeks even years.
- If you are waiting for levels or specific moves you may have to time when you get in the trade. If you are looking for a big move you may have to wait longer to get in the trade and risk more. Run your profits! If your opinion is correct
- Run your profits! If your opinion correct is then it may take a long time for the full move to happen. If you have waited for a long time to put the trade on you should think how long you want to run the trade. Again long term can mean years!
- Technical levels and moves will effect other markets. Research what other sectors and stocks are linked to what you are trading, you could be able to maximize your profits by trading other products on the back of your opinions, while already utilizing your current exposure.
What do you want to Trade?
What do you want to Trade?
Forex
With an estimated USD 3.7 trillion traded each day, the Forex market is larger than the Stock and Futures markets combined. Forex is the currency markets and these are always traded and quoted in pairs, so you will be trading the euro/dollar for example, meaning you will be buying the euro and selling the dollar.
CFDs
Choose Contracts for Difference (CFDs) for a more flexible method of online stock trading. Over 7000 CFDs across 25 global exchanges are currently available. With CFDs you do not actually own the share/commodity/contract you are only trading on the price going up or down. This means less risk and the ability to trade up to 30 times more than you deposit as margin.
Equities
Equities offer the most well-known trading options with most house hold names being listed on the exchanges. On average 11,000 equities from over 23 of the world's major stock exchanges accessible through the most comprehensive trading platforms.
Futures
Futures are one of the most reactive and liquid markets. You can get a futures contract on most major stocks and commodities. They are very fundamentally driven and one of the best products to trade for the short term.
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