5 Things You Should Know Before Getting Into Online Trading

The fintech revolution has enabled nearly anyone, anywhere to take part in online trading. In the past decade, more and more professional and novice traders have joined the revolution and began investing online. There are millions of traders around the world and the online trading community is increasingly growing. If you wish to get into the exciting world of online trading and investing, here are five things you should know:

1 – Choose the right platform

The most important thing to remember is that all trading involves risk, so you should take all necessary measures to reduce the risks you take. While trading itself has its risk factors, there are peripheral risks that can be easily avoided. Many platforms promise easy ways to make incredible profit, but as these things normally go, if something’s too good to be true – it usually is. To avoid falling into these traps and losing your money to empty promises, make sure the platform you choose is regulated by certified regulation authorities, and has the means to secure your finances and personal information by using encryption methods and working with well-known banks.

2 – Find your trading style

While the term “trading style” is quite broad, one of the key factors to consider is your desired level of involvement. Depending on the type of assets you trade, your style could range between scalping, which is opening and closing trades within minutes, through day-trading, all the way to long-term investing. Naturally, the shorter the lifespan of each trade, the more you need to spend in front of the screen – so make sure you pick a style that fits your availability.

3 – Fundamental or technical analysis?

If you trade online, you have to use some form of analysis – otherwise you’re just going with gut-feelings and you could lose your money quickly. Generally speaking, there are two types of analysis. Technical analysis focuses on reading charts and trying to find recurring patterns, with the belief that the past is an indication of the future. While this could sound overly-simplistic, technical analysts often look for intricate patterns, involving multiple variables over long periods of time – so repetition of these patterns are quite rare and might serve as an accurate indication.

Fundamental analysts on the other hand try to predict how a certain asset will behave in relation to the different market forces that affect it. They read earnings reports, tune in to the news, and try to determine how a certain financial instrument will react to an upcoming event, recent scandal – or any other relevant occurrence. There is no complete dichotomy between technical and fundamental analysis, and some of the best traders use a combination of both.

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4 – You can (and should) copy other people

One of the main innovations brought forth by online trading is the introduction of social features. Those who wish to get into the online trading world, but lack time or experience, have the option of attaching some of their funds to successful traders, copying everything they do in real-time. The CopyTrading feature, pioneered by eToro, simplifies the process of copying others by enabling users to sort through millions of traders, and filter them according to gain, success rate, risk score and much more. This way, those who wish to take less of a “hands-on” approach to trading can do so with little effort. If you wish to discover traders to copy, you can use eToro’s discovery tool.

Practice, practice, practice!

As with most skills, becoming great at online trading requires a lot of training. However, since you’re risking your own money, it is best to start practicing with a demo account. Some platforms offer users a virtual money account, so that they could experiment with different styles and figure out what works for them. Take your time, experiment with different analysis methods, holding periods, and asset types, and make sure you know what your preferred strategy is before risking your money. On eToro, opening an account is free, and you get $100,000 in virtual money to trade with. Try it now!