Online Forex, Commodities trading is very popular today, thousands online brokers offer various trading tools; platforms and bonus to attract customers open an account.
Is “Make Money with Few Clicks” true? The author has work on online trading platform including design and implement over 8 years, in this article will provide 10 tips for peoples who trading or will trade online.
1.Trade Less
Do not buy or sell many times a day, all online broker will offer spreads on average 6 pips to 10 pips, the means when you open an order, you already theoretically LOST 3 pips to 5 pips, plus the commissions which normally from $40 to $60 per lot, converted to pips is around 4 to 6 pips per lot. That means if you make a completed trade (buy and sell or vise verse) you already LOST 10 to 16 pips. If you make 10 orders per day it is 160 pips
2.Multiple sources of quotation system
All online platforms provide real-time quotes for their customers, but these quotes is NOT directly from REUTER or BLOOMBERG, it first feed to brokers’ servers and then feed to customers’ computer, normally with 1- 2 seconds delay, if you rely on this quote, you may trade with ‘HISTORICAL PRICE’. Try to own a second sources of quote, if you can afford $3000 per month, suggest use BLOOMBERG or REUTER, you will get real time price or may be is a bit faster than the brokers’ feed.
3.Trade Energy Futures or hot items.
The most fluctuated product is Energy Futures, it can with over 10-20 % up-down per day, and this can make you easy to get profit (or lost). If you trade on some items without waves, you will feel very bored and lost interest (currency item) with over night trading
4.Aware the market gap
Feed providers will clean up all data (FUTURES, not currency) at 10-15 minutes before NY market open, so the prices of this moment is not confirmed or not trusted, just place order at 20 minutes or later after NY Market open.
5.Don’t be shrink by human error input
By author’s experience, it is not rare that trader of NYEX will input a wrong price with a big gap; Reuter or Bloomberg will not filter such price, but will announced later this is a wrong price. So if you see a price that makes you rich or broken at 1 minute, just deep breath and wait for next price, normally the wrong price will correct within 10 quotes.
6.Chart is only for you to capture the trend
Do not try to become a technical analyses expert. “Support, Resistance, RSI…….” Put all these into your bin, you just keep your eyes on really time tick chart and following the trend to place your trade. Do not try to guess TOP or BOTTOM.
7.Less is more, simple is smart
A simple signal is very reliable - when the 20 days moving average crossing the 55 days moving average.
8.Try to be an Introducing Broker
Most online brokers are welcomes IB (Introducing Broker ), the IB act as a sales person of those brokers, and the brokers will provide tools and commissions to these IBs, even you don not want to be real broker, by you can be the broker of yourself, every time you trade you will receive commission from brokers if you act as an IBs, normally the brokers will offer 2-3 pips or $20 to IBs for per trade, think about if you trade 10 lots per day, how much you will save
9.Economic data is rubbish
Every day, at least have 5 economics indicators or reports, such as US Non Farm Payroll…… all these data contain deviations and will amend at a month later, if you rely on those data, you will always panic and panic and finally become a loser
10.Cut lost
Once you capture wrong trend, cut lost. Don’t dream about it will be break even at tomorrow or next week, it will never happen. 75% customers liquidate when they have 10 - 25% profit with smile. But they never cut lost even they need to add margin to hold an open order that already lost 200 pips. Don’t be one of those 75%.
By: C. Walker