When it comes to protection within the confines of day trading; the lines are clearly demarcated. In other words, there are steps that you as the trader can take to best safeguard yourself, and then there are steps that the broker can/will take in order to safeguard their operations and in the process, you too. As their client, your protection should be of the utmost importance. However, it’s not enough that you place your trust in the hands of your broker; you must cultivate certain practices, applicable not just online, but in life itself, such as diligence and vigilance. Tied into these two concepts are certain day trading tips that you can also implement when you’re online going about your currency speculation. With all this in mind, let us now look at the various ways in which traders can safeguard themselves and what brokers do on their end.
Tips for the traders
The world of day trading is nothing to be scoffed at. Your profits can be great, but so can your losses. In today’s globally connected world of the internet, trading has availed itself to the everyday man, but just because it’s become more common place amongst those seeking to find new vocations or alternative incomes, doesn’t mean that it’s lost its lustre or its formidable nature. Here are some tips for traders looking for a career of longevity.
Learn before you try to earn
The old clichéd notion of ‘practice makes perfect’ continues to ring true and applies to the world of day trading also. For anyone looking to brave the volatile waters of trading without sinking, a demo account provides the ideal opportunity. Most regulated online brokers provide all new-comers with a demo account and with it, some demo cash too. The setup mimics the actual trading environment with charts, currencies, and numbers, and lets you traverse this world without spending a cent and without losing a cent. With a demo account you can get a real feel for what you’re in for.
No not be a bull in a china shop
Day trading can be volatile and there will be times when you take great risks for great rewards. However, if you’re going to survive in this game, then patience, diligence and vigilance will need to become part of your trading mantra. Plan your trades, don’t just go all in like a gambler. This involves research and staying abreast of applicable news and politics. For instance, if the US buys less oil and natural gas from Canada, then Canada’s economy can be impacted and a trickle down effect could be that there will be Canadian tech companies affected by USD/CAD exchange rate. Many traders apply what is often referred to as the 1% rule, which dictates that you never put more than1% of your capital into a single trade. To simply illustrate, if you’ve got $20 000 in your trading account, you shouldn’t risk more than $200. Also, make use of a stop-loss, a process by which you let your broker know that you’re either buying or selling when a certain price is reached. By going about things this way, you can dramatically lessen your losses – why incur large ones when minor ones will do?
[[[H2]]]How your broker safeguards itself[[[/H2]]]
Your broker is a business and all businesses can be exposed to cyberattacks ranging from malware to social engineering down to Distributed Denial of services (DDos) – the process whereby hackers bombard a website making it unstable and causing reputational harm to the point of demanding payment to stop. The good news is that regulated brokers are well aware of cybercrime and thus set aside large spending budgets to combat attacks, protect themselves and their clients. Through the use of in-house IT security specialists, protective barriers and protocols are monitored and maintained around the clock. Quite often companies will also have an insurance policy to safeguard against any unforeseen attacks and thus offset any potential losses. As for the rest of the staff behind the scenes, education is key and thus many broker company employees will regularly undergo training to raise awareness around cybersecurity.