According to Joshua Hampton, a senior financial advisor at Olsson Capital, more and more individuals try their hand at online trading; some of them even willing to place almost all their savings on trades they think will make them a bigger profit. Hampton, at a recent conference, mentioned that before one starts trading online; it is a good idea to have a look at some of the secrets wealthy traders share with regards to their own experiences.
Remember that each trade has other fees attached to it
When making trades, it is common for new investors to only calculate returns and other figures by making use of only the investment amount used to make the trade. It is important to remember that, apart from your investment amount, other fees should also be added to calculate the true amount you are spending. These fees include brokerage fees as tax fees and if not taken into account, can put a huge dent in your return expectations.
Stop wasting time looking for something better
When trading online, a huge chunk of your time is dedicated to researching the market and watching market analytics. It is found, however, that many traders spend so much time searching for the ultimate trading option that they do not actually make a trade, thus losing precious trading time, especially if you are a day trader. Rather than wanting the ultimate trade, go for stock that has a low value and has a good potential of delivering higher rewards in a short period of time. That is much easier to spot and requires far less searching time.
Risk is good in small doses
Hampton suggests investing capital amounts that will still have you sleeping soundly at night. Yes, investing a small amount in stock still poses a risk but should the trade go sour, you have only lost a small portion of capital and would easily be able to make up for it with your next trade. Therefore, you need to determine what your risk tolerance is and stay with it without moving out of your comfort zone.
Don’t settle for stock that keeps making the headlines every day
As a rule of thumb, just because a specific stock sport in the news headlines with positive remarks, it does not mean that that is the stock you need to invest in. You need to take the time to evaluate the current ratio of a stock and look at its analytics. Just because a stock looks good and profitable, you first need to research it before buying it.
Build your portfolio according to your individual needs
Walking hand-in-hand with the above tip, you should not add a certain stock to your portfolio just because it is a popular stock to have. Take a step back, look at what your needs are as a trader and build your portfolio accordingly. If you are a new trader, your portfolio should have about one or two stock choices and as you gain more experience in the trading world, you can gradually add more to your list.
Let a brokerage firm take over your finances so your focus can stay on trading
Although brokerage fees add a little more to your expenses, you will still save in another way. You will have more time on focussing what matters most; executing trades to make more profit. It is widely seen that wealthy traders make use of different brokers so you are not stuck with only a few to choose from. In order to feel safe about handing over your capital to a brokerage firm, you need to make sure they have your best interests at heart.
In a nutshell, you don’t have to follow the crowd in order to make a success of your trading ventures. You need to find what suits your individual needs and what will make you, as a unique trader, make more money. With the above tips from wealthy traders, you can soon turn your trading dabbles into a full-blown business venture and if done correctly, an entrepreneurial success!