The information provided in this article is intended to help anyone interested in online trading get started. This material can be easily applied to any market. It was designed for those who may have heard that online trading is a great source of income, but have no idea how it works.
Choose a way to negotiate
Since high speed internet has become available to almost everyone, online trading is very popular nowadays. Today anyone can trade anywhere on any financial instrument.
If you are new to online trading then do not worry as there is a huge amount of trading platforms, products, markets and brokers. For a beginner, it is best to use a popular trading method.
It’s simple. A dealer offers a buy price and a sell price for the market you are trading in. The difference is the spread. If you think the market will grow, you open a buy price trade, which is known to be long. But if you think the market is going to fall, you open a trade at the short sell price.
CFD is the abbreviation for Contracts for Difference. Similar to spread betting, CFDs allow you to benefit from both bullish and bearish markets with both buy and sell prices set by the dealer.
CFD traders would trade a particular amount of shares or lots at a certain buy or sell price. CFDs have tighter spreads compared to spread bets, but finance taxes and dealer commission are applied.
ETF is the abbreviation for Exchange Traded Fund. ETFs are like stocks, but rather than buying a stake in a sole proprietorship, you buy a stock is a fund that tracks the price of a commodity. ETFs are bought and sold the same way as stocks, paying a commission to a broker.
Unlike CFDs and spread betting, ETFs do not offer the opportunity to profit, although this does mean that losses cannot exceed your initial investment.
Choose your market
It is very important to decide what to focus on and to become a specialist.
Forex represents a form of global trading that estimates the relative value of various currencies in relation to each other. Forex trading is popular around the world and operates 24 hours a day, except weekends.
Each market is represented by a currency pair. For example, GBP / USD is the value of the British pound against the US dollar. When you trade forex, you are speculating on the value of one currency against the opposite pair.
Indices are used to measure the value of the chosen stock market selection. For example, the FTSE 100 index represents a rating of the top 100 companies listed on the UK Stock Exchange. When you trade indices, you are speculating on the rise or fall in the value of any selected index.
There is a lot more to learn, but for those new to this industry it is important to at least have an idea to get started and then deepen the philosophy of online trading.