Learn how to – How Risky Is It To Start Trading Online?

Learn how to – How Risky Is It To Start Trading Online?.

So you’ve read or heard about the success that can be achieved through day trading? Perhaps you’ve been intrigued by the journeys of master traders such as Warren Buffet and want to have a go at achieving your very own slice of the pie.

But is it safe? How risky is reading? Can we avoid or decrease risk factors? 

Today’s article is here to clear up the risks and factors to consider before you start trading!

So What Exactly Is Online Trading?

In basic terms, online trading is the selling and purchasing of financial assets through as the name suggests, the internet. With the help of trade advancements, this procedure has been streamlined to reduce the need for cumbersome paperwork. Today with little help one can find an online broker and in a few simple steps and by providing some information anyone can begin trading online.

Risks Of Online Trading

Like with everything that’s done on the internet there are a number of risks that one needs to know about and consider. So what are a few risks one needs to acknowledge before trading online?

Unintentional Information Disclosure

In basic terms, Data Breaches. Any smart cybercriminal looks to gain access to the most valuable data they can get their hands on. These places financial institutions at great risk from cyber attackers. In fact without fail every year the hard-working staff at the Identity Theft Resource Centre witness thousands of data breaches, thankfully these breaches are steady every year and not on the rise.

Virus & Malware

Viruses and malware are often designed to snoop around while you use your computer and even track your internet activity. Logins and other important information can be obtained by cybercriminals using spyware that has been installed on a victim’s computer. In order to steal your identity, specific malware such as one that monitors your keystrokes is most common. 

This allows the cybercriminal to know what you are typing on your computer whether online or not. This can be combated through the use of great antiviruses and malware scanners.

Phishing

Phishing, also regarded as MITM or Man-In-The-Middle, is in essence a doppelganger fake website. It is additionally possible to use URL spoofing, including the development of phoney but persuasive documentation that impersonates financial institutions. Again the goal here is for the victims to unsuspectingly type in their login details. Cybercriminals will then use the credentials to access your account on the real website and rob victims of their funds.

How To Trade Online Safely

Almost every brokerage firm is subject to stringent audits and security processes meant to secure your online profile. To keep an eye out for emerging threats, these organisations enlist the help of security experts. That being said, there are a few steps you can do to ensure your safety when trading online.

Choosing A Broker

First and foremost you’re going to want a good broker. If you are like most people you wouldn’t know where to start, thankfully you could check out some of the best broker apps here with a fully comprehensive guide regarding all you need to know about trading apps.

When picking a broker the first priority should be to check the most important metric, what is their regulatory standing? If the site is not regulated by a tier one licensing body it’s recommended to avoid it at all costs.

Enabling Two-Step Authentications

Before finalising your account sign-up, one can additionally enable two-step authentication. This will add an additional layer of security on top to your password. This should be a no-brainer and should always be activated, especially when trading in larger quantities.  

Even though it’s one of the simpler steps one can do it’s one of the most effective ways of keeping cyber criminals out of your account! Essentially all two-step authentication really does is ask you or anyone trying to log in for a verification code. This verification code will be sent via text or email depending on your preference.

Keep note if a cybercriminal has access to your email they can still access your account with two-step verification on or off.

Site Encryption 

Another super important factor to check regarding the broker of choice is their site encryption. The typical 128-bit key encryption offered by SSL encryption is already considered one of the best encryption tools out there. SSL is considered to be somewhat invulnerable, that being said the Titanic was also considered unsinkable. 

However sites without basic SSL encryption should too be avoided at all costs, usually, search engines even provide a warning that the site you are about to enter does not have SSL encryption or in other words, you are not safe on this site.

Time Log-Outs

This is another great security feature that should be activated if it’s not a standard feature on the site. Usually, this feature goes by the terms inactivity logouts and is a great way of keeping your information safe. Think of it as an auto-closing door, if you are too busy or forget to sign out the door/right to your data and financial assets will close after x amount of minutes.

Things To Consider Before Trading

Now before you get too excited and begin your online trading journey it’s extremely important to consider the next few points. Trading is a time-consuming endeavour it takes hours of studying markets and looking at numbers on a screen for countless hours. Even though one can find auto trading bots to do all the work there are still risks, which takes us to our first point.

1. Remember Risk Is Always At Play

Investors face the possibility of losing a lot of money in the process. Hence the importance of sticking to what you can afford to lose. Although it could be tempting to go all in on a certain stock it’s essential to remember to stick to your budget. 

2. Make Sure You’re Informed On What You Are Investing In

Too often have we seen new investors blindly follow the advice of genius investors without doing their own homework. If you are managing money, you should spend some time getting to know the product inside and out. It’s common for the product’s operators to act like gambling dealers. In their minds, they would like the house to triumph, and this may or may not mean that you also come out on top.

As a general rule, don’t depend on a bank to tell you what’s going on.