Investing is a business and you need to take it seriously before you begin to risk real capital. There are several things you can do to prepare yourself including teaching yourself about specific markets as well as the different tools you can use to generate successful trades.  Your broker will play a pivotal role in helping you learn online trading.  Make sure you determine the type of news and analysis they provide as well as if they have an economic calendar, live rates, specific technical indicators and a demonstration account.

Getting Started

Your first step should be to determine what kind of educational material you can find.  Don’t restrict the material you cover.  Look at a broad range of material including strategies, risk management, and technical indicators.  You should evaluate all the material your broker provides as well as anything you can find on the internet.  Most reputable brokers have video material that you can watch at your leisure. You will likely find robust articles and interesting videos on many subjects.  If you have never traded before, a video will also show you where to look for additional learning tools.

Building a Strategy

Once you have covered the basic concepts, you are ready to build a trading strategy.  Your strategy over time will likely continue to change, but you need to start somewhere.  First, determine how you would like to trade.  Do you want something that is undervalued or are you more content with investing using momentum and ‘catching a wave’?   You need to understand yourself and how you will react when the market turns against you. This can help you determine the strategy that is right for you.  For example, when you look for value, the price of the asset you are trading could move lower. It’s possible that when you first purchase an asset that is declining that it will continue to decline. If this makes you feel uncomfortable, you need to find a different strategy.

Once you pick a way to enter the market, you need to build your risk management strategy. Risk management determines how much you are willing to risk for your desired reward.  It’s very important that you understand that you are getting paid to take risk. This means there is a chance that you will lose money. You want to make sure that you have a strategy that can hopefully make money.  In order to gain, you need to win more than you lose. If you make more than you lose on most trades, than you can afford to lose more than you win and still theoretically make money.

Using a Demo Account

To test your entry and risk management strategy, you can use a demonstration account before you risk your own capital. A demonstration account allows you to use all the tools available including access to live-quotes to trade the market.  You are not risking anything with a demo account.  Test drive your strategies using a demo account which will allow you to determine the best course of action to meet your financial goals.