In the age of digitized reality, it really is possible to shop for any commodity online, from the most humdrum supermarket goods to glow in the dark ice cream. If online commerce is your thing, instead of listlessly browsing the Ebay listings like a child lost in an unlimited superstore, why not explore the altogether more exhilarating opportunities afforded by day trading? While it takes skill and knowledge to forge a career from playing the stock market online, good fortune, instinct and judgement are also pivotal. Here’s how to swing the odds in your favour…
Weigh up the benefits
There are strong advantages to choosing to trade online over more traditional systems. Fees are usually lower and there’s access to an unlimited range of feeds and resources which can be used for research. Moreover, your decisions are ultimately your own to make. Just remember: without guidance or direction, it can be easy to get ahead of yourself and make risky choices if you’re a novice.
Before setting out to become the next Wolf of Wall Street, evaluate your assets. Finances will, of course, be the first consideration, but there are other, more practical factors. You’ll need a reliable, swift internet connection, a decent software platform, and above all, a strategy. You’ll need to figure out if your interest will be in creating capital growth or income, and how to buy shares accordingly. There’s also the small matter of choosing a broker through which to trade, which could well be your existing bank or online stockbrokers like Interactive Investor available to you.
Diversification is integral to building a strong trading portfolio, whether aggressive, defensive or speculative, and generally speaking, multiple investments diffuse the risk. Those attracted to volatile commodities should keep their long-term portfolio separate from their day trading fund. With the same token, volatility can generate higher risk and loss, so if you’re not comfortable with losing money, low-risk, low-return shares which will generate a return over time may be the slow and steady way to win the race.
Negate the risks
In the absence of any impending dot-com booms, if you want to make money fast from day trading, and your assets aren’t extensive, it’s likely you will have to plump for a few high-risk investments. Even then, it’s hard to make money over and above commission to your broker. To keep risk low, always close at the end of the day, vouch for limited liability equities, do your homework on your investments and keep one eye trained constantly on developing business news to avoid any nasty surprises!
Remember it’s fine to begin slowly and build up your confidence – and your resources – over time. With around 7.5 million people are trading online in the US alone, it’s a career move that can really pay off but it’s also something that needs time and energy to succeed. Though it’s tempting to plunge in and start trading beyond your actual funds, a beginner needs to play more cautiously than most, even if it means you don’t see much return for the first few months.