Are you a newbie in the world of online trading and wondering if there is a ritual or checklist to start your trading day?
Or
Maybe you are a traditional trader who has a keen interest in exploring the online trading industry. Either way, you must know that there are too many variables and activities going on when you log in to the online market place.
You have to see what the new trends are, how your stocks did overnight (if you put it up for automatic trading), the predictions of the day, etc. In simpler terms, you must do your homework before you start trading, or things can get the better of you.
Do not worry; most people initially have the same fears and concerns as you. Of course, it is understandable that you do not want to lose your hard-earned money because of some silly mistakes.
The good news is, there are certain checks you can go through, which will help you skip the unnecessary and focus on the bullseye. Once you have mastered your checklist, it is time to get down to business from the moment you start trading online.
Continue to read the checklist we have prepared for you.
7 Tip Checklist for Online Trading
Here are seven checkpoints you must touch before you begin your trading day. Follow this checklist religiously, and soon it will become your second nature to quickly identify stocks, the prices, the trends, and more that you really need to target.
#1: Know how to Check the Trends in the Market
Strong trends in the trading world help identify whether an asset you own or have an interest in buying has any potential, leading to high profitability. Knowing how to identify a trend and act at the right time can give you a competitive edge over others. Most importantly, it will keep you safe from entering a bad deal.
As a trader, you must learn to find the most promising trends in the online market place.
#2: Know How to Identify Your Position
As an online trader, it is a must for you to learn your area of value. It is the motto of every trader in the world to buy low, sell high, isn't it?
Whichever asset, stock, or shares you are interested in, you must know your investment threshold, i.e., what price are you willing to pay for a certain asset. Ideally, do not exceed your financial limit unless you are truly and really sure about the gains.
This is where Support and Resistance come into play, and that takes us to our third checkpoint.
#3: Know Your Support and Resistance (SR)
If you are new to the world of trading, here is what support and resistance mean.
· Resistance – is a selling trend with high pressure to push the price of an asset to a lower value. This is also known as a downtrend.
· Support – is a buying trend with high pressure for buying an asset and increase its price value. This is also known as an uptrend.
There are some benefits of using SR when trading online.
· It puts you in a better position to sell due to your extensive evaluation.
· You already know when you make a mistake or things are about to go ugly.
· You have better chances of bagging profits.
· Your risk to reward ratio increases in your favor.
#4: Know the Volatility of Your Assets
You do not always have to identify the upward trends for profitability. There will be days when you log on to the marketplace, and there are no strong trends. But it is part and parcel of this domain.
So what do you do? Well, you trade on assets from a short-term perspective. This means you must ensure that assets you are trading in are volatile enough for you to sell in a smaller timeframe and come out with profits.
However, when it comes to checking the volatility, do not look at the day's trend but the overall or historical volatility of your preferred stocks. That said, just keep a simple definition of gauging the volatility, i.e., the higher the indicator's value, the higher the volatility.
#5: Know the Volume
Volumes are the indicators of the current state of the trading marketplace. Whenever you are checking the price action and current volumes, always consider two aspects.
· Is the price of an asset rising on low or high volume? If you observe a rise in both prices and volume, it can lead to accumulation.
· Always remember that above-average volumes are known as heavy accumulation or heavy distribution in a sell-off scenario.
You do not have to master the volume analysis, simply knowing if a volume is supporting or going against the market trend is enough for your pre-trading ritual.
#6: Know Your Risk
Whether you are a pro or a newbie to online trading, you must ask yourself this question i.e.
· How much capital are you willing to risk?
Most traders make a classic mistake of blowing up their finances, thinking they are chasing the "right" trend. Do not leverage your account to its maximum but limit it to ten to one on all trades.
Moreover, it would be best if you set limits on all trades, and you do not risk more than 5 percent of what you have in your account's balance.
#7: Know Daily Updates, News and Announcements
Always check the daily updates, news and announcements on your online trading platform and in the world of trading. Check if any significant economic changes will impact the overall trading or the assets you currently hold.
Sudden market news can turn your profits into a disaster. Thus, you must know about all the ups, downs, and temporary fluctuations in the market. Moreover, it would not hurt to stay updated on current affairs as they seem to affect the market's behavior in both traditional and online trading industries.
Expand Your Checklist
Of course, the above checklist contains tips that every online trader must follow. However, as you become familiar with the online trading industry, feel free to add on other checkpoints to your to-do list before you start your trading day.
For a more in depth look at the basics of the Stock Market, check out