It’s no secret, in the world of online trading, 90 percent of traders lose more money than they make, which begs the question, what do remaining 10 percent of successful traders have in common? The answer is simple; they pursued an education in online trading.
One of the industries that is generating curiosity and is on the rise, especially in today’s mobile friendly and digital age, is online trading, specifically Foreign Exchange (FOREX) trading, as this is more stable relative to other stocks and commodities that are being traded on the internet.
However, online trading is not a sector that anyone can just venture into. It is a skill that needs to be nurtured, refined and honed. Furthermore, it needs time and the right knowledge in order to succeed.
Many people have the misconception that they can make money through trading Foreign Exchange (FOREX) and Contracts for Difference (CFDs) - derivative products that allow an individual to trade on the live market price without actually owning the underlying assets on which their contract is based. However, without the right acumen, these individuals will most likely speculate optimistically on an outcome and fail, rather than make a well informed and educated decision about the future of a potential trade and succeed.
The common assumption is that there is a knee-jerk reaction to the rise and fall of currency rates. This is simply not the case. The FOREX market is affected by a complex system macroeconomic factors that include unemployment, inflation, interest rates and political stability just to name a few. An adjustment in one may not necessarily indicate a fluctuation in currency, however many people believe this may be the case, causing them to speculate resulting in unfavorable success rates.
Being well informed about a country’s overall macroeconomic environment and correlating the situation to outcomes from case studies and prior experience enables an individual to make an educated decision on how the currency will move in order to make profit.
In order to succeed in the world of online trading, an individual needs to have three key attributes. The first involves knowledge on how the market works, how to identify trends and patterns as well as how to use the trading platform to their benefit.
Second, they would require Information that consists of the proper materials needed to make an informed trade. A good example of what information would be required is knowledge of the previous day’s activity, financial news alerts, a tried and true strategy as well as the right indicators to plot entry and exit points.
Lastly, a trader would need discipline, the ability to control and manage their risk and money properly.
In today’s world, many people throughout the globe are seeking to secure their financial future. As a result, many are opting to educate themselves in how to manage personal finances and secure opportunities to earn supplemental income.
Like any other business, there are up and down cycles. The idea of FOREX trading is not to have a 100 percent success rate – as this is virtually impossible to achieve. However, if a trader can achieve a 55 percent success rate or more, over time and with a well-balanced portfolio they can realise increased savings and potentially achieve true financial freedom.
Any opinions expressed here are the author’s own.