If you have never had anything to do with the world of online trading, you are forgiven for finding it slightly intimidating, and you may even think you don’t know enough to get involved. However, nothing could be further from the truth, and with the right information, trading is made easy and accessible to anyone who wants to have a go.
The global pandemic has caused more people to look for things to do online, and one of the great things about stocks and trading is that you need your computer or phone and an Internet connexion to make some money. It makes it a perfect side hustle that you can use to increase your cash at the end of the month and some people become so successful that they ditch the day job altogether and become full-time online traders. So, let’s have a closer look at online trading.
Your best friend when it comes to online trading is your broker, so you should take time to make this friend by doing research and ensuring that you are working with a broker or company that has a good reputation and is honest and committed to helping their clients not creaming off the profits.
There are plenty of reputable brokers out there so avoid social media promotions or private messages that come unsolicited as potentially these will not be in your best interests. When you are trading, you are selling and buying financial securities, and the broker’s job is to be your middleman and ensure you do the right thing.
There are many different types of trading, and one of the fundamental rules is never to put all of your eggs in one basket. You will hear the term diversifying your portfolio, and this is valuable advice, the more diverse you keep your trading endeavours, the less chance you have of losing everything in one fell swoop.
For example, if all of your stocks and shares are in 1 industry and that happens to fall apart, you will be left with very little, but a crisis that affects one area does not carry right through across the markets so your other stocks and shares will be relatively safe. Forex trading is one of the most popular and is short and to the two letters FX.
With this, you are buying and selling currencies and attempting to make a profit based on these transactions because different currencies have different values around the globe. It is often a recommended place for newbies to start as you do not need to have a lot of cash or knowledge to follow what is going on. Forex trading has become very popular among young professionals.
Next, we have stock trading, which most people have heard of and generally mistake for being the whole thing, but it is just one type of trading, and you purchase or sell or even hold onto different stocks for companies listed in the public Stock Exchange. The most popular stock exchanges like NASDAQ and AMEX are terms that people are familiar with but don’t fully understand.
Stock prices go up and down depending on various factors, and just recently there was an issue where a company was deliberately inflated in a scam to push up their stock prices so that a group of traders who had purchased them at a low value could sell them at a very high value. This isn’t technically how the market works.
It is more complicated than that, and they shouldn’t have been doing it as it was exploiting the system. The value of stocks and shares relates to the global marketplace how well the company is doing, reputations and other factors. There are different types of trading, but these are the most common two and a great place to start.
Get your house in order before you begin, this means you will need to have the right tech in place, and many traders like to track progress on multiple monitors. Of course, you can start small and work up to this, but whatever you decide, even if you are going to trade on your mobile, you must have a reliable and fast internet connection.
You want to make sure you are using the best trading platforms, and you can be pointed in the right direction by making your next step that of finding your broker. Please do some research and do not be afraid to ask them any questions you feel you need the answers to for reassurance. Your first investments should be a low value because, of course, you can lose and never profit from any trading.
But in that case, your broker won’t be doing their job, so if you start small, it’s like a trial run for you to learn the ropes and for your broker to prove they do understand and are genuine (if not, fire them and find someone else!). Make sure you have a stable basis before moving on to high-value investments. If you are going to take trading seriously, you want to see it as a second business. This means you need to develop a plan and strategy that requires you to do some research, so you understand the products you are trading in.
The last thing you have to learn is when to make a withdrawal and how to leave enough money to make other investments. It is a bit like a form of gambling, and the tendency is to keep throwing good money after bad even if you are losing.