By: Eastern Eye Staff
Online trading is a profitable and growing business. Investors are looking for new avenues to diversify their portfolios and earn higher rates of return. You can buy just about any asset you’d like online, from tech stocks to gold.
The two most popular types of online trading are stock exchanges and foreign currency exchanges (forex). This article will explain how to choose the right platform, decide on a broker, and the basics of online trading.
The main thing to do to choose a broker before investing any money is to research and compare their services and the fees they charge. Once you’ve decided on a broker, open an account by either going online or calling them (depending on the broker). After you have the account number, test it out by making some trades with play money before putting any actual money on the line.
When you are ready to invest, choose a portfolio that matches your investment profile. Pick specific stocks or funds to invest in. You can also set up automatic investing features that will invest a preset amount for you, rather than investing all your money at once.
The first step in trading online is becoming familiar with the orders you can place. This will help you understand how the markets work and provide a framework for further research and planning. There are three types of orders investors can place namely, market orders, limit orders, and stop-loss orders.
Investors buying and selling stock at the best price is considered a market order. A limit order is buying stock at a maximum price owed and selling it at the minimum price receivable. A market order is when you pay the market’s best price available to you. That is, if you place a stop-loss order below the current market price. If you place it above the current market price, it becomes a limit order.
Stop-loss orders are tools used to minimize losses when the stock’s market value drops below a certain point. Some brokers charge fees for placing these orders, so be sure to ask your broker before placing one.
When choosing a trading platform, consider those features that will be most beneficial for your trading needs. If you’re going to do a lot of trading, you’ll want to make sure the platform supports that kind of volume. If you plan to day-trade, make sure the platform will not limit the number of trades you can make in a day.
Looking at the fees and commissions associated with each platform and how they compare to competitors’ rates, can help you avoid extra fees when you place a trade or withdraw your money.
To invest and get a good return with online trading, you need to understand the basics of online trading and choose the right platform. Manage your risk to make smart investments and get professional advice from a reliable broker. Verify that either the Financial Conduct Authority (FCA) or the Financial Services Authority (FSA) regulates the broker. With the right tools and strategies, you can trade online with confidence.