How to Make Money Trading Online

Today, we live in an uncertain world and many of us worry about the future. With COVID-19 and lockdowns imposed by many countries, the economic situation is only getting worse. Many industries are thought to be eliminated or changed forever, and many common professions will no longer exist. The world is changing and if we want to survive, we need to adapt and learn new skills for the new economy. 

But it is not all doom in gloom and, as the Chinese proverb says, every crisis presents an opportunity. Our modern digital world also presents many opportunities for those who are not afraid to learn new skills and take action. The development in technology democratised many industries and today many of us have much bigger computer power in the pocket in our smartphone then previously were available only to large corporations. 

While on one side more and more large corporations are downsizing and laying off people, on the other, one more and more people start making money online and become self-sufficient. As Robert Kiyosaki explained in his popular book “Rich Dad, Poor Dad”, there are 3 ways for people to make money: 

  • Own Business
  • Real Estate
  • Investing in the Stock Market 

While the first two will require a substantial commitment of time and resources, you can start in the stock market very quickly and make money trading online. 

In this article, we are going to explain and teach you how you can make money trading online and start generating passive income. You are going to learn how you can generate 20-40% profit per month by trading online, how you can copy experienced traders and their top=performing strategies, which broker platforms are the best for beginner traders and what pros and cons the most popular platforms have. 

Of course, you will need to dedicate time on learning the basics, you will need the discipline to follow the strategy and you will definitely need the courage to take action, get out of your comfort zone, risk a bit of money to join the exciting game of online trading. But if you want to get results and achieve financial freedom, you can definitely achieve that and make money trading online. 

Top 4 Best CFD Broker Platforms

The Difference Between Investing and Trading

So, when you hear people saying that they make money trading online, what do they mean? First, you need to remember that there is a difference between investing and trading. 

Investing is usually associated with long term capital commitment where you would expect the value of your investments to go up in value over time. Investment portfolios are usually well diversified between different asset classes, such as stocks, bonds and commodities and correspond to individual investor’s risk level, from low to high. Investing is usually related to savings or pensions where an individual needs to achieve a certain return on investment to meet it’s long term goals. Low-risk investment portfolios usually generate 2-4% p.a. return while high-risk investment portfolios might achieve returns of 10% p.a. or higher. Performance of investment portfolios will usually depend on the performance of the market in general and it’s volatility. 

Trading, on the other side, is a speculative activity where the risk and reward are potentially much higher. With trading, you can make money both in rising markets by taking long positions as well as in falling markets by taking short positions. You can trade stocks, indices, ETFs, commodities, forex and cryptocurrencies and use leverage to significantly increase return on your investments. In trading, people usually hold their positions for a short period of time that can range from days to minutes or even seconds. The more volatile the markets, the better for most of the trading strategies as potential returns on your investments can be considerably higher. There is a large number of traders who make a living from trading markets full-time investing their own or friends and family money. Yes, it might take some time for you to learn how to trade and develop your own approach and trading strategies, but it is very realistic to make 40-50% return on capital per month, so even if you start with $10,000 initial investment, you can take home at least $3,000-$4,000 per month in profits. 

Of course, you need to remember that while such profits are realistic, and some traders achieve considerably higher returns, trading and investing is a risky business and you can also lose money if the market goes against you. That is why it is extremely important to remember about potential risks and not to invest more than you are prepared to lose. It is better to start with smaller investments if you don’t have much experience, you must be very careful when using leverage and also use such features as stop loss to manage your risk exposure. 

What is Online Stock Trading? 

When people talk about online stock trading, they usually mean trading with online broker platforms. There are two main types of brokers and there is a huge difference between them. 

Traditional Stock Brokers

Historically, these were high street brokers what worked with their clients over the phone. With the development of technology, they also start offering online trading platforms but they still have one pretty big disadvantage – costs. With traditional brokers, you would invest in the underlying asset which means that you will also need to have custody and other associated trading costs. While the trading fees are generally going down, many traditional stockbrokers would usually have a minimum fee per ticket which can be $5 or higher. If you trade actively and your investment pot is relatively small, the costs accosted with trading become quite large and can eat all your returns. It is usually recommended to open traditional brokerage account if you have at least $100,000 in investible assets and not planning to do day-trading. For that, there is a good alternative such as CFD brokers. 

CFD Brokers

CFD stands for Contract for Difference and is a financial derivative instrument where the difference in the settlement between opening and closing price is paid in cash. There is no delivery of an underlying asset, physical goods or securities with the CFD contract. CFDs are used by traders to take a bet on the price movement and can be used to take long and short positions. As you don’t need to buy an underlying asset, the minimum size per CFD contract can be as low as $0.1 and you only need to have enough money to cover the price difference. You can trade CFDs on most of the popular stocks, indices, commodities, cryptos or currency pairs and minimum deposit with most of the CFD brokers would be $100 or less. 

How to Make Money in Online Trading

There are numerous ways you can make money by trading online and we would live to cover in details the main ones. 

Trading on Your Own

This is the most obvious one where you can do all the trading yourself manually. In that case, you will need to spend time learning how to trade online and the basics of technical analysis. You will then need to test and try various trading strategies and develop a certain discipline to be able to stay calm during the market storms. While you can stay in full control of your trading activity, one major disadvantage of that approach is that you will need to constantly monitor the market and your trading positions. As we have seen recently, most of the markets are pretty volatile and that means you need to react immediately all major events and price moves. That requires a commitment of time and attention and not many people can manage to do that successfully. That said, there are two other popular options that are available to everyone and that become extremely popular in recent years. Want to find out what they area? Then continue reading… 

Social Trading 

Social trading become the fenomena only in recent years with the development of online trading platforms such as eToro or ZuluTrade. The way social trading works is that allows you to monitor what other successful traders are doing and copy some of their trades, or simply follow them automatically. Social trading became extremely popular over the last 2 years with hundreds of thousands of people joining the game. 

Think about it…. To become experienced in something you will need to spend a lot of time studying the subject. If you only start making your first steps in trading online. It is very possible that you will be making mistakes and losing money. On the other side, there are some people who spent all their life trading markets, analysing stocks and developing top-performing trading strategies. In the past, such traders would be only able to trade their own money, or maybe also friends’ and family’s, but not visible to anyone else… But thanks to social trading platforms, they can make their trading strategies available to other people who can follow or copy them for a revenue share. And it’s a win-win for both parties. Experienced traders can make additional income from revenue-share arrangements with other people and spend more time and resources on improving their trading strategies. Ordinary investors, on the other hand, are able to invest alongside experienced traders and achieve investment returns only possible for seasoned investors. Another advantage is that you don’t actually have to trust your money for someone you don’t know, which was one of the main problems in the past. You keep money on your own account but replicate the trading positions of the trading strategies of your choice. If you look at some of the social trading strategies on eToro or ZuluTrade, you will be able to see that many investors are posting very good returns that can be as high as 100% per annum, or even higher. And it is not possible to fake such results as they are monitored reported by the broker platform which actually sees all your positions. Just to give you an example, below are some of the best performing strategies on eToro and ZuluTrade

The Best Performing Strategies on eToro

How to Make Money Trading Online with eToro

The Best Performing Strategies on ZuluTrade

How to Make Money Trading Online with

Automated Trading

Automated trading is another popular method for making money in online trading. What it means is that the trading strategy is a pre-defined rule-based algorithm which is managed and executed by a computer. Automated trading has been historically used by institutional investors, but with the development of technology and democratisation of online trading platforms became available to many individual investors as well. 

With automated trading, you can define all trading parameters and instruments that you can invest in, and let computer program do the job for you. Ther trading algorithm will analyse the market and based on certain parameters will make trade recommendation when to buy and when to sell and will also execute the trade. 

Traders have the ability to design their automated trading strategy from scratch but that would require certain programing skills and knowledge of technical analysis and trading strategies. Alternatively some brokers offer automated trading strategies templates where the trading rules are built-in but you can change parameters such as stop-loss, trade size, take home profit and other similar ones. 

Automated trading platforms have been especially popular among cryptocurrency investors where extreme price volatility of Bitcoin and other cryptos requires super-fast reaction and execution speed. Many of our readers who investred with trading robots such as Bitcoin Revolution or Bitcoin Code report that they were able to generate on average $2,000 to $3,000 in passive profit per month with initial investment of $500. 

Today, cryptocurrencies remain the most profitable asset class where high price volatility provides an opportunity to make huge profit for experienced traders. 

Top 5 Best Automated Trading Platforms

Is Making Money in Online Trading scam or legit? 

Many people who don’t have experience in trading, at first often are quite sceptical about how much money one can make from online trading. However, we personally know many people who make a living by trading online full time. Ow, don’t get me wrong. If you expect easy money and think that you can generate thousands every month without taking any risks – you might be disappointing. 

First, online trading could be risky and you can also lose money if the market goes against you. Secondly, not many people are not willing to put time and resources to study technical analysis and online trading, nor have the discipline to follow their investment strategy. There is nothing worse than to go emotional in online trading. And we also know many examples where people lost a lot of money just because they abandoner their investment strategy when markets got a bit shaky. Even if you decide to choose the easier route and start with social trading by following experienced I people, you still need to spend time by researching different traders, understanding their investment style, reading their reviews and analysing their positions during different market conditions.

So, it is fair to say that you can make money trading online but it is not free money and you much be prepared to spend time and dedicate resources to this initiative. 

It is also important tho chose the right broker platform and we are going to explain How to Choose Best Online Broker in a separate review. We are also going to teach you How to Create Money Making Strategy.  So follow this space and stay with us! 

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