Trading stocks is a business that we all thought about, at one point or another in our lives. Watching movies of how rich people get richer or poor people become millionaires has risen our interest, whether we admit it or not. However, the same movies have taught us that it is not all money and glamour on Wall Street. The risk of investing all your capital in shares that may very quickly drop and bring about bankruptcy is very high and you know it. However, brilliant minds will always find a way of profiting from trading stocks online, but this time with a lower risk and the help of extra capital. And this is where things get interesting. Highly renowned brokers have found a way to help you benefit from the rise and fall of stocks by investing in them or by merely speculating on their movement on the market. The latter is a type of trading stocks online through CFDs – Contracts For Difference. In the following paragraphs, you will learn how to trade stocks online, how to use CFD trading and which platforms help you profit from both.
How To Trade Stocks Online
Before, trading stock was definitely not for anyone with extra cash and you needed a broker to advise you on what and when to buy and sell. Now, through online trading, anyone can benefit from the fluctuations of the market. However, when I say anyone can benefit, that doesn’t mean that just anyone can win. You need to do your research right, find a regulated and trustworthy broker, with learning material that will teach you now to trade stocks online and win from it. So, let’s take a look at the two main types of stock trading online, through CFDs and directly through a broker.
- How to trade stock as an CFD product – as I mentioned earlier, CFDs – Contracts For Difference are contracts made between a buyer and a seller, in which they agree for the seller to pay the buyer the difference between the current value of the asset and the value at a given time. This meaning that instead of buying or selling something, you, as a trader speculate as to what the price of the asset, stock, commodities will be, at the contract time. If, on the other hand, the difference should be negative, then the buyer pays to the seller the amount. In other words, CFDs are merely financial derivatives, which allow traders to speculate on the movements of the share price, without having to buy these shares. Among the benefits of trading stocks online through CFDs is the lack of broker fees and commissions, making it easier for you to keep your profit. Also, you may move in and out of a position much easier and at lower cost. Furthermore, you may use the leverage or margin that your broker is offering, thus risking less of your own capital, while gaining access to global markets.
- Trading stocks online through broker – is a form of electronic trading which brings together buyers and sellers, through specialised platforms and networks. Thanks to the evolution of the Internet and the banking methods now available, common traders and speculators may open positions and take advantage of the fluctuations of the stock market.To start up even easier you can claim some awesome forex bonus offer and start with additional funds. The biggest advantage of nowadays stock trading online is that investors can use technical and fundamental analysis to help them make the most profitable decisions. There are numerous information resources and technical features that will prompt them to open or close a position, based on analysis and previous movements of the stock market.
Hot Stock Trading Online – Profit From The Rise And Fall Of Shares
One of the most important things in stock trading online is finding what to trade and when. Hot stocks are the most volatile stocks, ranked by the highest standard deviation in comparison to their last 20 days of data. Trading stocks that are highly liquid is the way to go, especially for the inexperienced trader or speculator. There are countless sources of information regarding hot stocks for the day, the week or a longer period of time. Also, the broker you use can also provide you with that information – so choose a broker that offers financial data and research without charge. However, no matter the data and platforms that your broker provides you with, don’t hesitate to look into other investment advices, alerts and news sources, so as to be fully aware of the stock market fluctuations. But before you start searching for the hot stocks and the most profitable positions, try first some smaller test bids, so that you can see and fully understand the correlations between your buys and sells and have a strong stock trading foundation.
The Insights Of Trading Penny Stock Online
Penny stock is the term used to define common shares of small public companies that trade at a very low price, usually under $5. However, this definition has been questioned numerous times, given as some large companies may trade their shares at under $5, while several small companies may trade shares at a higher price than $5. One of the downsides of trading penny stocks online is the fact that they are highly volatile, therefore being subject to market manipulation and may present a high risk to the trader. Most penny stocks, especially the ones that trade at the lowest prices, are rarely traded, thus making them illiquid and somewhat dangerous. The highest risk of trading penny stocks are the so-called ‘pump and dump’ schemes that they can be the target of. For example, one individual or organization buys millions of shares and promotes them by means of social media, fake press-releases and even e-mails, pretending to have inside information on the shares going up. This way, they rise the interest, and therefore, the price of the shares. Once that happens, comes the moment to ‘dump’ these shares at a much higher price, leaving the other investors or speculator at a huge loss. This is the main reason for which few brokers offer and promote this kind of trading, so as to protect the investments of the traders. No matter the low prices of the penny stock trading, if you are not using a broker that offers analysis and real insights into trading online, your profits are at risk. So the most experienced traders prefer stocks that are traded at a higher price, because of their liquidity and more stable transactions.
Platforms For Stock Trading Online – Top Features
Whether for stock trading online or any other kind of speculating and investing, it is wise to use the platforms offered by your broker. The trading platforms are computer systems which can be used for placing orders of a financial nature. This makes it possible for speculators and investors to trade bonds, currencies, commodities, stocks and other financial products. Most traders prefer the automated or so-called mechanical platforms. This system will allow you to set some criteria for automatically opening and closing positions. Use thorough analysis of past data and you will be able to choose the best system and, based on accurate criteria, let the automated platforms do the trading for you. Let’s take a look at the top features of the platforms for stock trading online:
- Stop Loss – or the so called stop order, is an automated order to buy or sell stock, once a predefined price has been reached. This feature is usually used by traders to limit the loss or protect the profit of a certain position. Using this automated feature, the trade will be executed, but the price at which it will be closed depends on the liquidity of the stocks traded. This means that standard stop orders are triggered once the bid price is equal or smaller than the set target price. This is an excellent feature that will protect your profit and cut the losses and it is recommended to the part-time traders, that don’t have the possibility of manually placing orders, when a signal is triggered.
- One Cancels Other Orders – this feature is used in case the trader wishes to profit from one of two or more possible trades. For example, if you decide that you want to trade one stock at $20 or a different one at $25, the first order to be executed is the one that reaches the target price and this order cancels all the other ones. The first thing you need to do is set the target prices for both or several trading possibilities. Then, once one of the stocks has reached the price you have set, the order will be executed and all other orders are off.
These are but few of the automated features for stock trading online that will make your life as a trader easier. Saving you time and money, automated platforms offer numerous other functions, like: Mid-price Peg, Market-if-touched-order, At The Opening, Bracket and many more. Each feature has unique and extremely useful application is your daily trading, so choosing a broker that offers such complex platforms is the smart thing to do.