Online Trading

If you thought the year 2020 in trading and investing was a one-off, think again! The trading volume is flying way above the roof after breaking through all the barriers at a breakneck pace last year. While the trading volume at the first quarter always tends to rise from the previous quarter, the current trend has no comparison. According to Piper Sandler, the average daily volume in equity trading has increased from 10.9 billion to 14.7 billion this year. Moreover, the average volume for January almost doubled year over year, after rising some 33 per cent from December 2020.

What's exactly going on here? Experts point to factors like the increased accessibility of online trading platforms, a massive rise in enthusiasm and participation among retail traders, government subsidies, etc., as the driving force behind such record-breaking numbers. The daily average volumes of the largest online brokers also point to the same. Some of the leading brokers have witnessed around a 20 per cent rise in monthly volumes from retail investors.

So Everyone is in the Money, Then?

With such an influx of money in the stocks and equity markets worldwide, it's obvious to assume that everybody is getting rich in the quickest possible time. Unfortunately, the reality couldn't be further from the truth. With cold, hard statistics showing that some 80 per cent of stock traders lose money in the long run, it's instead a grim situation. It means that only 20 per cent of the traders get to break even or rake in a profit consistently. A lack of know-how of the markets and financial analysis is at the forefront of why so many traders lose out.

Don't worry, though. If you are here reading this article, you are perhaps someone who wants to learn. And to help you out, we are going to discuss the three keys to unlock the success door of online trading below:

1 - Learn to Learn and Read

No, learning to learn is not just a soundbite. With so many online resources, it isn't easy to know how to approach learning about trading and investing. Are you someone who understands more by watching videos? Or do you like to read blogs and journals for learning? Whichever modes of education you prefer, try to find some good sources with innovative materials. Besides, many prestigious news websites can update you about the latest financial news right in your pocket.

Reading books is always an excellent way to learn, even if it is about trading online. After all, the principles of stock trading are the same for any medium. To that point, a quick search on the internet will point you toward a lot of great books. As they say, it is fundamental to learn the fundamentals.

2 - Make Data-Driven Decisions

If you go through step one, you should know that nothing is more important than factual data in stock trading. There are many of them for any individual stock, ranging from quarterly reports, company spreadsheets, historical and daily charts, price-action movements, etc. At the same time, there are also the general trends in the market, the mood among traders, etc. The rumours get out of hand quickly, too, leaving no ways to find the truth other than data. A successful trader needs to look at all these factors and analyze them scientifically to ensure their trading decisions are a success.

3 - Practice and Practice Some More

Even when you are all educated and raring to dig deep in online trading, you should take a breather and do some paper trading first. Unfortunately, neither the financial markets always conform to the theories, nor does your logic and emotions. Hence, instead of putting your real money right away, take advantage of per trading or virtual trading. The chances are you will find the feature built-in with your trading platform. While virtual trading is not quite the same psychologically, it is the closest experience you can get to prepare for the real thing.

While these are maybe the three fundamentals to succeed in online trading, you should constantly evaluate your decision-making process and make any necessary improvements along the way.