What will you learn:

Watch out for events

Support and resistance levels/lines

Writing a journal

Keeping your goals in mind

No space for emotions

Global politico-economic events and others not directly related to the financial market such as unpredictable calamities, have considerable impact on the price movements of particular assets. These events can be used as potential indicators in asset trends’ prediction. This makes it important to watch out for important news, events, economic data releases by influential bodies. Statements and speeches by influential people can also influence the direction of specific assets. This process is termed Fundamental Analysis.

For example, the wildfire breakout at Fort McMurray, Canada, last year, caused much harm to surrounding oil sands, resulting in a freeze of oil supply. This sent oil prices considerably higher. Likewise, the Nonfarm Payrolls data released on a monthly basis in the U.S. is a powerful indicator of the U.S. economic health. The data has a direct impact on the strength of the U.S. dollar and how it fluctuates up and down. This impacts all currency pairs with the US Dollar on either side and assets such as crude oil and Wall Street stocks.

Keeping track of support and resistance levels forms part of technical analysis, which is the analysis of charts to predict the market value of assets. Support and resistance levels refer to the two extremities of an asset’s market value on a chart. Support level is the range below which an asset’s market price has not often trended while resistance line is the level an asset’s market price has rarely exceeded. Referring to these lines makes it quite easy to determine the range in which an asset will trend. It is advisable to keep support and resistance levels in mind while choosing whether to open or close a position. In instances where an asset is, for example, seen about to hit a resistance level that it has hit several times before, one may choose to close the trade as the asset will most likely, not cross that level.

Failing isn’t the end. It is actually an opportunity to learn from your mistakes. However, traders often repeat the same mistakes and that comes down to a lack of proper evaluation while entering specific positions. If these mistakes were evaluated in a journal and worked upon so that they are not repeated, traders would be able to optimise their success while trading. Among things worth noting are the specific strategy, date and time of entering or exiting a position, profit and loss levels, reasons for choosing a specific strategy and so on.

Rationality is key to trading successfully. A considerable loss or unexpected movement in the price of an asset can induce frustration in traders and urge them to trade with even larger sums of money. The idea is to compensate for the loss and that is not very recommended. Being frustrated, one may be led by the intuitive propensity to bounce back through another try and brush aside the rationality it takes to be successful with Online Trading. Instead, it is recommended to keep away from trading for a while, get refreshed and get back to trading with a cool state of mind.

And finally, as a trader, you need to define your investment style and financial goals. You need to know what you are trying to do and identify trading opportunities that match your goals. For example, are you trying to consistently make small profits or are you trying to only identify a few trades that you will invest heavily in?