The world of online share trading is fascinating, yet challenging world. It simultaneously scares and excites people. There are many people who would like to trade online; however, they don’t necessarily believe they have the right understanding and temperament to trade successfully on anyone of the global financial markets.
What types of online traders are there?
In a nutshell, online traders can be distilled down to two types of people – winners and losers. A trader can either trade successfully or he can trade unsuccessfully. It’s black and white, similar to the yin and yang concept. There are no grey areas in between.
What is the difference between these two types of traders?
In summary, a winner is someone who trades successfully and creates wealth. He has a unique insight and understanding into how the global markets work; which, he is then able to use to leverage the current market conditions to his benefit. A loser, on the other hand, is exactly the opposite of a winner. He does not have either the temperament, knowledge or understanding of how financial markets work to be able to trade successfully.
What makes an online trader a winner and why is another online trader a loser?
It is actually rather simple. In the online share trading world, winning traders have a competitive edge over losing traders. According to Sam Seiden at the Online Trading Academy, a competitive edge consists of two parts:
“Mental: Having a mental edge is a combination of proper reality-based thinking (void of illusion), having extreme self-control and focus.”
“Strategy: Having a strategic edge means owning a rule based strategy that ensures success over your opponent. Your strategy must offer you the lowest risk, highest reward, and highest probability entry.”
In simple terms, a trader needs to be able to focus on the essence of online trading. Far too often, placing trades ends up being an emotional, knee-jerk reaction to changing market conditions as a result of global political events. Secondly, a trader must design a strategy which will reduce risk and simultaneously increase rewards. A winning trader needs to be able to narrow his focus on the core business of analysing assets and deciding whether the assets fit into his trading strategy. If they do, he trades on these assets; conversely, if they don’t he discards them immediately.
Would you like to be a winning trader? Would you like to develop a winning trading strategy? Here are 4 tips to help you transform yourself into a winning trader:
Decide on your short-, medium-, and long-term goals
Why do you want to trade online? Are you wanting to create wealth for your retirement, i.e. a long-term goal, or do you want to save for your next holiday, i.e. a short to medium-term goal?
What trading vehicle or instrument are you going to use to trade on?
There are essentially two different types of online trading instruments you can use:
Binary options trading where you do not trade on the underlying asset. You trade on whether the price of your chosen underlying asset moves up or down within a specified time-frame.
Traditional online trading where you buy and sell commodities, foreign exchange, and indices; both on your local and global stock exchanges.
Research, Research, Research
The only way to understand and predict the possible movement of an asset is to study its historical, current and predicted future trends. Learn everything there is to know about an asset. You can never do too much research. Once you feel you understand the trends of an asset, you can decide whether you want to trade on it or not. Most online trading platforms offer a trading academy as a guide to understanding online trading and how to place trades.
Trust yourself. You will make mistakes.
It’s important not to second-guess yourself. You will make mistakes. We all do. What is important is to stick to your plan or strategy. If you research the asset thoroughly, you will reduce the number of mistakes you make. It’s also important to remember that sometimes the financial markets react unpredictably towards sudden political events. In this case, my recommendation is to sit tight and watch the markets. Don’t make knee-jerk decisions based on fear.
The development of a competitive nature of a trader needs to be grounded in self-discipline, mental toughness, mental clarity, and a winning strategy. If you have all of these elements, you will succeed in the highly competitive world of online trading. The good news is that a competitive trading nature can be developed.