You need a strategy, and a trade or investment decision can be evaluated in the context of that strategy.
Set up your target, think big, take the first step. Trading strategies’ success originates in your mind. Once you decide to focus on trading, take into consideration the following material and what is more important—trust yourself. We are happy to share some important techniques by the Interactive Brokers that would assist you in online trading. Below are some of them:
Definition: Fundamental Analysis focuses on studying everything that can affect a security’s value, including macroeconomic factors (like the overall economy and industry conditions), in addition to company-specific factors’ analysis, such as its financial condition and management.
Main goals: To produce a value that an investor can compare with the security’s current price, aiming to figure out what sort of position to take with that security (underpriced=”Buy”, overpriced=”Sell”). This approach is especially valuable in online trading.
Applying Fundamental Analysis: Cause and effect: evaluating financial markets means analyzing current economic data, synchronizing your decisions with daily market events in order to find out the future direction of the specific asset you are interested to trade with. Basically, Fundamental Analysis helps you to analyze and evaluate a security that involves its intrinsic value. All political and economic events are beneficial in taking a decision. Note: some Interactive Brokers provide you with various online trading guides on Fundamental Analysis.
Trading Tip: Look at the economic calendar
- Certain economic releases have more impact on the markets than others.
- Economic releases typically have a significant effect on the value of the country’s currency relative to other currencies.
Definition: Technical Analysis is the art of forecasting the future price of a trading instrument based on historic price.
Main goals: Usually, technical traders use price charts to conduct their analysis with the x-axis being time and the y-axis being price.
Applying Technical Analysis: Traders who prefer to apply technical analysis use a graphic display (usually a chart) that explains the trader how he can study different exchange rates of specific assets. It is good to keep in mind that both technical and fundamental analyses are provided by some interactive brokers’ websites.
By using these exchange rate charts, the trader can predict the future direction of the selected asset/s. To sum up, technical analysis includes the study of charts using different technical tools and instruments.
- You don’t necessarily have to forecast where the asset will go, you can simply predict where the asset won’t go.
Definition: Social Trading is an innovative feature that upgrades your trading environment, transforming the notion of trading into advanced technological tool that allows you to follow particular assets’ progress.
Main Goals: Social Trading helps you to make up your opinion regarding specific stocks, commodities, currencies and indices values, watching the trades confirmed by the other experts on the companies’ website, and as a consequence, commit the best possible trading deals.
Applying Social Trading: Social trading gives a broad perspective on the “big picture” of trading, allowing individual traders to compare their opinions with the perspectives of the majority of traders, thus achieving the best trading results.
- You can easily follow your fellow traders’ success and “copy” their exact actions, thus benefiting from online trading.
- Make time become your friend, approach online trading with eagerness and devotion.
Note: Nothing great was ever achieved without enthusiasm.