You don’t have to follow Money Nomad for long to know that I’m a big fan of investing – from stocks, to real estate, to P2P loans, anytime you can get your money to work for you, I’m there.

If you want to get serious about online trading, I recommend that you continue learning. Check out free webinars (such as those from the Australian investing platform, CMC Markets) and find investment communities that you can tap for further insights (such as the community on the US platform, Motif Investing).

And although I’m not a professional investor, here are ten things that I believe are absolutely critical to know before getting started as an investor. Enjoy!

1. Think long term

Contrary to popular belief, any online trading venture should never be considered as a road to quick riches. Rather, it should be thought of as a long term investment with long term returns. Online trading ventures are dependent on economic conditions and market dynamics, and these change from time to time. This means that you need to be patient when trading so as to get the most out of dividends and avoid losses. Thinking long term makes it easier for the trader to make investment decisions such as the amount of money to invest, exactly when to trade and how long to invest, among others.

2. Planning is a must

Most people usually think that online trading is a matter of gambling, a belief that should be demystified. Just like any other business, online ventures should be planned and strategized before finally taking the bold step of investing your money. Having an online trading plan and sticking to it is the first step towards achieving maximum returns from your investment. With better planning, you get to analyze your options much better and make sound assessments and resolutions for your online venture instead of totally relying on sheer luck.

3. Research shouldn’t be ignored

Markets are known to fluctuate every now and then and this is true for both online and offline trade. First of all, you need to research about the various online trading companies before finally deciding to invest in one. Go through each of these site’s online tools and information carefully before finally deciding on where to invest. You could also research about the company’s reputation, consider referrals and recommendations and go through reviews and comments to know if that particular company is the right one for you. You also need to research on the market trends before you start trading.

4. Anticipate failure

Online trading has its own fair share of risks just like other highly profitable businesses. It is good practice to always be aware that failure in online trading could happen at any time. Failure may be in term of losses or even the business being completely unsuccessful. For this reason, you need to be very careful about all the investment choices you make when trading online, but this doesn’t mean that you will be resistant to failure. The best thing to do in such a situation is to learn from your failure. Also, you should never invest more funds than you can afford as it is riskier if you can’t easily afford the cash.

5. Bidding and asking prices

Trading online is more like a free market where there are no specific rules about the prices and rates. Most people do not know this, and they more often than not, settle for the first price they see or are told. Every online trader should learn the skill of bidding and asking prices when buying or selling shares, trading stocks and taking part in forex exchange or any other online trading investments. The buyer and seller will discuss their prices and come up with an agreement. One important thing to keep in mind is that you should ensure you buy for less than you plan to sell.

6. Buying low and selling high

This is the only way to achieve profits from your online trading venture. As simple as it may seem, it actually takes a great amount of care and perfect timing. While most online traders assume that this is too easy, it is important to invest at lower prices and sell at higher prices for maximum profits. You should always be on the lookout for the prices to drop so you can buy, and for the prices to rise so you can sell. Whether it is spread betting, stocks or forex trade, the knowledge of bidding and selling greatly helps in entirely exploiting on your investment.

7. Every trading experience is different

It should be kept in mind that online trading experiences are never the same for two different traders. Get to learn the basics of online trading and if possible, take a course. Even with all the online trading knowledge, it is very important to have realistic expectations. So many online trading blogs talk about making millions within a short period using some crazy procedures. Online traders should be cautious about this as most of it is probably exaggerated. You need to keep your expectations low especially if you are just starting out.

8. Practice makes perfect

No matter how qualified and experienced you are, nothing will teach you online trading best like practice does. The more you are involved in this field, the better you will get at every bit of the trade. You will understand how the financial industry works over the internet and how to work your profits around the changing financial trends. While you continue trading, it does help a great deal to read reports, listen to podcasts, join an online community and keep learning better online trading strategies. Even if you fail at some point, you must continue to learn the best ways to solve it.

9. Stay on top of financial news

To adapt to changing markets, it is of great importance to keep to tabs with financial reports and news on a daily basis. Most of the time, your online trading platform usually has financial news related to the trade embedded on their websites. This makes it easier for you to see the rises and drops in the financial market, enabling you to know exactly when to invest and when to sell. It also doesn’t hurt to visit financial websites, watch financial channels and shows on television and read from financial reports and news from magazines and newspapers.

10. Analyze and trade smart and fast

After analyzing your online market, it is very important to decide where to invest really fast. This is mainly because online financial markets change really fast and a trader should learn to make the right investment decision really quickly. You need to learn to use stop-loss orders and limit orders to prevent effects of bad trade or steep losses. This is the smartest way to trade online and avoid big risks such as losses or complete failure.

Apart from learning to use the above tips to maximize your profits in your online venture, you’ll also benefit from joining an online community of other online traders – such as those on CMC Markets and Motif Investing – where you can learn and share useful information about trading. While online trading is quite volatile and risky at times, implementing the tips above will give you better chances at solid returns.

Finally, you can learn more about where I invest by taking a look at my current investment tools.

For the comments: How do you invest? Is there any advice that I missed in the list above?