As with many other aspects of life, the Coronavirus pandemic challenged the normality of the day-to-day lives of many professionals. This includes brokers and online traders, that’s why these tips to trade stocks from home are just what you needed.
The boredom of many forced them to turn to new hobbies, challenges, and even ways to make money. Since — for a moment during 2020 — unemployment is calculated to have reached 16% in the U.S alone.
So what did people do during the lockdowns, quarantines, and overall uncertainty?
From exercising to making TikToks, people found ways to distract themselves from the monotony. In some cases, they began Trading. In fact, during the first quarter of 2020. Trading volumes spiked far beyond 2019 numbers and online brokers saw a huge rise in business.
But these businesses aren’t the only witnesses to the growth in trading. The average daily volume has seen a massive rise. In the following report by Piper Sandler, we can see how the volume in equity trading rose significantly.
Equities: Average daily volume
- 2019: 7 billion
- 2020: 10.9 billion
- 2021 so far: 14.7 billion
Who Is Trading?
Many experts theorize that people started day trading to try to make up for lost income during the pandemic. Although financial advisors are insistent against doing so, people are willing to deal with the risks.
But who are the risk-takers that are responsible for some of the biggest news in trading like the GameStop (GME) stock short squeeze, or Dogecoin’s rise in popularity?
The digital generation (or the generations impacted mostly by the digital age) made up mostly of the likes of Millennials, and Gen Z. Have fortified their use of digital tools in part to the pandemic. So it’s no surprise that communities like Wall Street Bets would come to host a large portion of traders that fall into these age groups.
The Future of Trading From Home
There are many people involved in the stock market today. The creation of trading apps has enriched the capacity for the average Joe to participate in small trades. As a whole we can see what the masses can accomplish. Yet, not many actually know how the stock market works, nor truly comprehend the risk of trading.
These high volumes of trading that we’ve seen in the past two years have brought about some situations where average people have cashed out, but also where some have have experience losses.
That being said it’s important to take into account some of the risks and opportunities involved with trading from home. Seeing as how there seems to be no sign that this growth in everyday traders will slow down any time soon. We can only expect this trend to keep rising and possibly staying.
Tips for Trading from Home During Covid-19
The first thing you want to do if you’re trading from home is to decide WHAT assets you’d like to trade.
One of your first instincts might be to dabble into a little bit of everything (Stocks, Crypto, Forex), and some financial advisors would actually advise keeping a diverse portfolio.
However, you should become an expert in the asset you’re trading. The industry, and keep up with the latest news from around the world that can affect your trades. It’s far too easy to want to do everything, catch the Fear Of Missing Out and make mistakes by overpaying for assets or picking entry points that are too high.
That’s why in this article, we will give some of the best tips for trading. From managing fear to analyzing risk. We will cover some of the most helpful do’s, don’ts, and examples of the basics before you make your first trades online
Tip 1: Choosing An Asset
Just as mentioned above, choosing the asset you want to trade is quite important and should align with your goals. Whether you want to trade trends occasionally, day trade regularly, or invest for the future (Investing vs trading) you’re going to choose different asset classes to trade.
So the first question you should be able to answer is “What are my goals?”
If you’re thinking about short-term trades that pull a nice profit, you’re probably going to be interested in a more volatile assets. Whereas if you wanted to build over time, you’d look at a more stable choice.
Writing down what your long and short-term goals look like will help you make your decision and map out you’re trading plans.
Cryptocurrency has been a very attractive, newsworthy asset. For people who are just now starting to trade, the hype alone might be enough to get them into trading crypto. The technology (blockchain) and its use, is one of the main reasons why so many investors look to crypto as the next big thing
However, seeing the popularity of Dogecoin — an alt-coin with the purpose of making fun of other alt-coins through a popular meme. Has shed light on a new age of investing where opinions are divided on the matter.
But the fact of the matter is that if you want to trade crypto it’s a great idea to look for coins with stable growth. Many are very new and should be just starting to experience the growth stage. So you should be able to go back to their history and see just that.
If you choose to trade crypto keep an eye out for news that involves the big names in the industry. Bitcoin is the original and most popular cryptocurrency. Ethereum is very popular and is developing many more uses with its blockchain technology. Alt-coins are competing for attention and their uses can too be applied to other areas.
Stocks give traders options. Day traders look for specific patterns within volatile stocks that can turn a profit by buying and selling in key moments. While long-term investors looking to diversify a portfolio with multiple companies that have promising value into the future and a history of stable growth.
When trading stocks you have the possibility to choose from trading; a couple of stocks, an index fund, an exchange traded fund, and other types of funds. Each has its own set of benefits and risks.
When you decide to trade stocks, not only do you have to choose how to trade them, but also choose stocks from a specific industry so that it’s easier to keep up with news from what’s going on.
And it never goes without saying that it’s always wise to check out some stock trading tips and educate yourself before placing trades.
Forex is the largest financial market in the world. This makes it especially liquid and easy to trade, yet quite volatile. The immense volume of forex trading in a day causes rapid price fluctuations.
Like stocks, forex is dependent on domestic politics. So it’s important to keep up to date with political, social, and economic events.
When it comes to deciding what to trade, there is no wrong or right answer. It all comes down to your personal preferences and your view on risk. Just make sure you’re comfortable and never risk more than what you can afford to lose.
Tip 2: Choosing a Trading Platform
Choosing a platform is like choosing a spouse or a business partner, you should think long-term. That being said, after choosing your preferred asset to trade. Your next step is to look for the right platform to trade what and how you want.
Keep an eye out for trading fees and commissions, learning solutions, as well as reviews about the customer service. Making sure you’re with the right broker and the right platform can make or break your experience. Not all platforms are built the same. There are some that have features that will be more useful to you than others.
As easy as it sounds, it’s always a good idea to keep a checklist of the features that each platform that holds your interest has. Compare them against each other and decide what’s best for you.
Tip 3: Master Your Emotions
It’s easy to get carried away with emotions when you’re risking money. It’s hard to see a trade objectively because of this. It’s a mix of fear and ambition that can hurt our trade. If you let your emotions rule you, your chances of success drop significantly.
The fact that we’ve talked about developing a trader’s mentality and mastering emotions before just goes to show how important it is.
Learning to manage your fears and control your ambition is imperative for trading. You don’t want to stay in a trade longer than you have to, and you don’t definitely don’t want to make rash decisions because you have the fear of missing out or the fear that the worst-case scenario will occur.
Covid-19 has had a huge psychological impact on people. In some cases, it has worsened symptoms of anxiety and obsessive-compulsive disorders. The case in point is that adding the impact of being locked into what already is an activity where emotions are flying high can be a recipe for disaster.
The stressors might be too much for some people to handle, but it’s the reality of trading. However, in most cases, you can fend off the effects of being lock-in through
Although easier said than done; there are a few techniques that you can use to control your emotions when executing a trade.
- Think of it as a point-based game (by using pips)
- Become confident in what you’ve learned (assuming you took the time to educate yourself) and know when it’s time to pull out of a trade
- Stick to your plan
- HAVE a plan
- Don’t risk more money than you can afford to lose
Tip 4: Have a Plan
Like every other important decision in life, you should make goal-oriented plans. Trading can be a fun learning experience, but it can also cost you a lot of money. Besides making sure you’re not risking more than you can afford to lose, having a plan can save you a lot of headaches down the road.
Creating and Executing a trading plan is the most important thing you can do. The most important tip we can offer is to have a demo account to practice your trading strategy. Making mistakes and trying new things with a Demo account gives you a sense of peace knowing that you’re not actually risking your own money.
When you’re creating a trading plan the most important thing you’re going to want to get down is your entry strategy and your exit strategy. There are plenty of tips for trading from home, but these are going to let you know when it’s time to enter and exit your trades. So you make money or cut your losses at the best time.