Last week, we laid out the necessary steps to commencing an online income stream through trading currencies (Forex), stocks, futures, options, Contracts for Difference (CFDs), commodities like oil as well as metals, say, gold. In a snapshot however, CFDs can be used to trade the rest through a buyer-seller contractual arrangement. Well, it’s quite reasonable to understand every nook and cranny of the trade because investing has its rules. One such rule is, ‘Never invest in something that you have no knowledge about whatsoever.’ Mike Tyrell, our informant from part one of this feature, comments that, ‘I don’t know how to buy and sell matooke, so I keep away from it!’ Mike’s humble beginnings on the trade were not an exception as he took one year of learning before he undertook any trading exercise. Once you have bagged enough concerning the trade, you can then join me for a roller coaster ride as I examine what exactly will make you tick amidst this rather turbulent and yet a pretty rewarding trade.Top of the list, you have to know which market will best suite you. Preferably, the British market is optimal for individuals residing in East Africa. This, as Mike advises, is due to the fact that there is only a two to three – hour time difference hence obviating the need to wake up at the wee hours of the morning to trade. Once you have identified your market, it’s quite important to understand it as well.
Choose your provider
Next on the list, you will need to choose your provider. The internet is laden with such providers’. However, there are a couple of issues you might need to underpin even before you chose one. Quite importantly as Grace Ampurira, a member of the Rats Network Investment Group and Mike’s protégé, advises, a provider with a less complicated user interface would be invaluable especially to a beginner. She continues to advise that most providers offer a demo account where you can get to practise with virtual money even before you put in your money. She however emphasizes the need to use the demo account prudently. On that note, she says, ‘use the demo account as if it were real money, shine at the demo before you shine with your money!’ Grace began to trade with her real money two months after avidly honing her trading skills on the demo account. Among resourceful providers are; AVA FX, FXCM, GFT UK and FX360.
Choose your trading strategy
The most important aspect of this trade is sticking to your strategy. Mike advises that you have to be disciplined, persistent and accept the fact that you will have to lose money at some point. He however lays emphasis on the fact that if you have a good trading strategy, you are bound to win more times than you lose. His strategy, one that he has developed overtime, normally gives him an average outcome of sixty to seventy percent wins. There are two main broad analysis that you can undertake to develop your trading strategies; fundamental analysis and technical analysis. Fundamental analysis involves your knowledge of the current economic developments. On the other hand technical analysis involves the interpretation of the trading chart availed by the trading software.
Become a mechanical trader
What would be your first reaction after successfully making USD300 (Approximately Ugsh. 750,000) in just one hour? Should I take a wild guess? The average Ugandan male would probably injure his arms while punching walls. He would then jauntily swagger to his favorite bar for some beer. What if the same individual lost USD 500 (Approximately Ugsh 1.2 Million) the next couple of days? I will wager this would be the bane of his short-lived trading career. Such mood swings are what Mike terms as emotional trading, one normally characterized by emotions of fear and greed. It should be your endeavor to overcome these two extremes and become a mechanical trader or rather an emotionless trader.
Could this trade be the dawn of your new financial story? Or could it be just another income generating myth? Grace hopes to make it a career. Amazingly, this is Mike’s career. Well, only you alone can decide. Good luck
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