If you’ve traded in the past, but with less than great results, odds are you are not doing it right. It is not easy to be a profitable trader, but that does not mean that it’s not possible. With the right approach, you can make money on a regular basis and take the gambling aspect out of your routine. But first, you need to start with the right frame of mind.
Like the markets themselves, your profit numbers will oscillate. Some days you will make money, others you will lose some. This is normal, you just want to make sure that the general direction of your numbers is pointed upward. Luckily, there are now several different forms of trading out there, so finding a type that fits your particular situation is much easier than it once was. You have three main choices: stocks, Forex, and binary options. Each have benefits, and each have downfalls. Let’s go over each quickly so you can get a feel for what might be best for you.
By definition, trading is a short term thing, and stocks can be expensive to trade, which inherently makes this something that needs to be done with larger amounts of money if you are looking to make money off of the stock market. This becomes even more of an issue if you want to sell stocks short or day trade. SEC regulations require a minimum balance of $25,000 in a margin account. For some people, this is not a problem, but for newer traders it is often an issue. The best way to be successful here involves a lot of studying of the markets, which will ultimately culminate in specialization. You want to learn how to make a certain type of trade in a certain corner of the market, and learn the conditions that set up a successful trade. The more automatic your trading gets, the more profitable you will be as you remove emotions from your trading and work more like a computer would. This can take a very long time to master, but once you do, the stock market can be extremely profitable.
The currency market accounts for about $1 trillion in cash changing hands every day, making it the world’s largest marketplace. The truth is, though, currencies don’t change a ton every day, and most brokers make day trading their predominant form of trading. Unless you are trading with tens of thousands of dollars every day, the Forex marketplace is not worthwhile. This was overcome by the invention of leverage, which allows the average trader to increase their trading power by 400 times or more. It makes it so that the average trader can make money here, but it also increases your risk. Having a thorough knowledge of money management is key to succeeding, but there are tools you can use to limit your risk, such as stop-loss measures. These are usually free of charge to employ, which is a big benefit over stock trading.
Benefits: Leverage multiplies earnings, fast profits, 24 hour marketplace.
Key Pitfalls: Leverage increases risk, spreads can make profits tough, fast paced market.
Trading Binary Options
The binary market is pretty new in relative terms, but there are some key advantages over other marketplaces. For one, you get a huge per trade profit when you’re prediction is correct, often 81 percent or higher. The bad part of this is that you lose 100 percent of what you risk when you’re wrong. The gap here is how brokers make a profit, and it can be difficult to overcome this at times. However, by offering a wide array of products and underlying assets, you are going to have an upperhand here. You can trade stocks and indices, currencies, and commodities through binary products. And a number of different trading choices are given to you while doing so. It gives you a large amount of customization for your trading, and this is something you can use to craft a close to perfect trade. Like the other forms of trading, you want to practice and learn as much as you can before you risk a lot.
Benefits: Low startup cost, high degree of customization, low risk per trade, News Movement.
Trading is a tough career, but it can create a huge amount of wealth when done right. Find what works for you, and then make the most of it. Until you are able to do this, move forward slowly and minimize your losses as much as possible. Losses will occur now and then, but if you can stay active in the market, you will inevitably see improvement in your profit rate.