Making Your Money Trading Online

Patterns for Profits Newsletter - September 3, 2007

The world continues to change because of the personal computer and the Internet, doesn't it? Every day there is something new; another program, a different website, something that can revolutionize your life in some way. The PC and the Internet have revolutionized the way you can invest in the stock market as well, thanks to trading online. A whole group of investment options have been created and because of these options, more people than ever before are getting involved in investing.

Before trading online came along, people interested in stock trading were forced to use the services of a stock broker. Frequently this meant trips to a brokerage firm to make arrangements concerning the buying and selling of their stocks. Now trading online gives investors a new level of freedom, allowing Internet trading from anywhere, 24 hours a day. Such accessibility is truly changing everything about investing. In order to get started trading online, there are some things you should understand.

Things to know about trading online

Internet stock trading has a number of great features: it is easy, affordable and offers independence to the investor. Trading online is safe and offers the closest thing to real-time trading you can get if you're not on the trading floor. In addition, trading online gives you the opportunity to implement your own investment philosophy and completely take charge of your buying and selling.

This freedom also has a huge responsibility. Investors who are trading online can no longer fall back on their brokers. The trader who makes a bad decision because he or she doesn't understand trading and investing will fail; you no longer have a broker to bail you out if you want to do something stupid. If addition if you choose to get involved in online Forex trading or futures trading, you can stand to lose a lot more than just your initial investment.

Getting started in online trading

If you have a computer and an Internet connection, you are ready to start playing the stock market. Some of the things that you need to do to get going are:

	Create a trading plan – If you haven't already done it, you need a trading plan. This is your roadmap to all of your investing plans and strategies. If you don't have one, you will want to write out your desired style of investing, your strategies for profits and losses and your plans for technical analysis. This will be your anchor when things start getting emotional, so put some effort into it.
	Research potential brokers – You will still be using a broker for trading online since a membership is required for anyone placing trades on the stock market. Different companies offer different levels of support and different costs for commissions. Make sure you get the level of support you need at the price you are willing to pay.
	Start with paper trading – One of the great inventions with trading online is paper trading. This is a virtual exercise where you can practice trading online . You will be given a virtual account and you can implement trades just like you would with a live account. There are two benefits here; first you can get a feel for the company's stock trading software and second you can test your investment philosophy. It's always better to learn about trading online by losing virtual money and not the real thing!
	Remember that you don't have a safety net – If you have previous experience in trading with a broker, remember that you no longer have that luxury. If you have taken full responsibility for your stock market online trading, you are “the boss.” Learn what you are doing and do it well.

Conclusion

Trading online puts all of the stock market risks and rewards in your hands. By learning to invest in the stock market , you can take advantage of the power of the Internet and create your own success trading online.

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Barking up the Wrong Tree

By Leslie Jouflas
Excerpted from the book:
‘Essentials of Trading; It's Not What YOU Think – It's HOW You Think'
By Larry Pesavento and Leslie Jouflas
Traders Press, 2004 

Many traders who have gone through the boom/bust cycle start looking for a “new” method of trading to relieve them of this painful cycle.

During this search the trader incorrectly directs his or her focus of attention to how much money someone else makes with this new system. They ask irrelevant questions such as, “What percentage are you up?” and “How much did you make last year?” Instead the trader should learn to evaluate a system based on it's own merits and ask questions such as; is the method capable of making money over the long term, does the method trade low risk/high probability setups, can the risk be quantified, is the risk acceptable, are there built in profit taking objectives and can I employ a good money management system?

I always wonder what the person is really seeking in these questions. Security, comfort or even a guarantee they will make money?

Trading is an independent and many times a solitary endeavor. It requires that the trader be focused on the process, not the outcome.

When a trader asks these types of questions it shows they are seeking comfort and are focused on the outcome and not on the process.

Another irrelevant question frequently asked is “Which way do you think the market is headed”? “I don't know”, is my usual reply. The person is usually surprised because they have a pre-conceived idea that traders should know which way the market is going. They do not yet understand trading in terms of probabilities.

The results of one method executed by multiple traders can have a very wide range of results based on many things including the skill level and experience of the individual trader and most importantly how well each individual trader can follow the rules of the method. A trader with 2 years experience will not be at the same skill level of a trader with 10 years experience.

Whatever methodologies of trading you choose to study do yourself a great service and shift your focus to the process. If you try and skip parts of the process you will only harm yourself by not gaining and learning the subtle and necessary pieces of information to be successful.

Be willing to commit to whatever time line it takes you as an individual to be a successful trader.

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Patterns for Profits Trading Tips

1.	Focus on learning trading execution skills
2.	Apply proven money management strategies
3.	Always use stop-loss protection
4.	Commit time each day to learning market behavior
5.	Commit time each day to studying a methodology
6.	Narrow focus to one or two trading patterns; become master of those
7.	Pick yourself up after setbacks and move forward
8.	Develop a positive mindset
9.	Establish a daily routine to build discipline and consistency
10.	Love what you do

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Leslie Jouflas
Kelly Hill