Investing consists of buying and selling assets on the financial markets. Online trading is now accessible to any individual wishing to increase their income.
Trading has long been an activity reserved for financial and investment professionals. However, the Internet has enabled a phenomenal expansion of online content, and brokers have quickly captured a burgeoning market of retail investors. Today, it is possible to start trading online just by following a few recommendations.
What is online trading ? How do I start trading online ? How do I learn to trade online ? What are the different steps to start trading online ?
Here is a comprehensive summary of the information you need to start trading online and generate your first gains in the financial markets.
Online trading consists of buying and selling financial products on the stock market through an online platform. A trader, whether professional or individual, places buy and sell orders in order to generate capital gains and thus increase their capital. Online trading means speculating on the financial markets in order to get rich.
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The first step to learn about online trading is training. This is an essential and fundamental step for any trader, as investing in the stock market is a complex and risky activity that can put one’s nerves to the test. To train effectively, there are a number of online resources. The majority of free training courses, from specialized blogs or online brokers' websites, are comprehensive and accessible. These courses provide a good first approach to trading and provide the necessary basics to get started.
Customized training courses are also available for a fee and have the advantage of being offered by stock exchange investment professionals. To move onto actual practice, beginner investors are advised to use a demo account. These accounts, accessible via registration on an online platform, enable you to trade in “real” conditions, without any financial risk, since the capital used is purely virtual. By practicing on a demo account, beginner traders can learn about the different types of analysis that are at the heart of the trading activity.
Technical analysis is based on the study of the evolution of asset prices via various tools and indicators. It allows investors to position themselves in the direction of the trend and to place relevant orders.
Fundamental analysis is the study of the underlying economic factors affecting financial assets over the longer term.
Finally, behavioral analysis focuses on the psychological aspect of trading. This is important, as stress management is one of the bases of stock market investment.
It is important for beginner traders to determine their objectives. Traders’ goals will differ according to their personal financial and professional situation. Some traders wish to focus fully on trading, in order to try to make a living from it. Others trade as a side hustle in order to increase their income. In any case, it is better to start trading on a real account with a small capital. Unfortunately, losses are inevitable, especially during the first few sessions of real trading. The psychological aspect can indeed be difficult to manage when the invested capital is no longer virtual.
It is therefore usually advisable to start online trading with a moderate amount of capital, since too little would generate too little profit, while too much capital would be too risky. If you want to make a living out of trading, you will need more capital.
Choosing an online broker is also crucial to start trading online. In recent years, the market has diversified considerably. Today many professionals offer their services to individuals. Would-be traders should make sure to select a broker approved by the AMF (Autorité des marchés financiers).
In addition, you can refine your choice according to the benefits offered by the professionals, such as the online platform user experience, spreads, or brokerage fees among others.
Generally, traders specialize in a specific type of financial asset, whose reactions and behaviors they are familiar with. Indeed, there are a number of securities to invest in over different markets, including stocks, currencies, commodities etc. Your choice of market depends on your trading style: if you’re interested in short-term trades, you’ll be able to generate greater profits in a market with high volatility.
On the other hand, if you’re looking for longer-term investments, it’s in your interest to focus on a safer market, where asset values fluctuate less.
To build a strategy, rely on a very popular tool : the trading plan. This is a real roadmap for investors that lays out the steps to follow to speculate while limiting risks and constantly improving your strategy.
You can also use money management techniques. A trader’s strategy must be adapted to their trading style : a short-term investor usually uses day trading or scalping strategies, while a long-term investor uses strategies such as swing trading. Finally, investors can also rely on the economic calendar to permanently follow the news impacting the markets.
Online trading is a speculative activity that allows you to get rich on the financial markets. Although complex and relatively risky, it is now accessible to most people through online trading platforms and training. If you’re truly motivated, it’s time to get started and generate your first profits !