Online trading is a popular way to make extra cash. Millions of people buy and sell stocks and shares, trade in the Forex markets, and speculate on the price of commodities. For some, it is an interesting hobby, but for others, it is a way of building a nest egg for retirement or supplementing a meagre pension. Whatever your reasons for becoming interested in online trading, the good news is that you can have a go for free.
Open a Demo Account
Most online trading platforms allow users to open a demo account. A demo account works in the same way as a real online trading account, except you don’t earn any money from your trades. You can’t lose any money, either, so it is a great place to start if you are new to online trading.
Opening an online trading account gives you time to learn the ropes. It takes most people a while to figure out how online trading works. You need to understand the way economic and political news affects the financial markets, get used to monitoring trends, and learn when to act.
Speculate to Accumulate
Online traders make money by predicting whether prices go up or down. If they guess right, they make money on a trade, but if they guess wrong, they lose money. You may have a good feel for market trends, but it is sensible to practice your strategies before you have a go with actual money. Open a demo account and create a virtual portfolio. Spend a few months buying and selling to see if your trading strategy works. If you end up in the black at the end of six months (or however long it takes you to feel confident with the process), it is time to invest real money.
You don’t need a lot of money to trade online, but it is sensible to start saving money for when you do decide to trade for real. Use your demo account to learn and take advantage of the many learning resources available on the internet. When it all falls into place, access your savings account and start trading.
Start small and don’t expose yourself to too much risk. You are bound to make mistakes, to begin with. Even experienced online traders and hedge fund managers get it wrong sometimes. Once you have a good track record, you can look at the ways of funding your online trading. Guarantor loans and borrowing on a credit card can act as interim funding until you make a good return on your investment.
There is no guarantee of success in the online trading world, but you do need to manage your exposure to risk. Never speculate what you cannot afford to lose. Follow the news closely and be aware of when major announcements are going to be made. Big events like a general election have a huge effect on the financial markets, so if you are unaware of an impending news bulletin, you could get caught out.