Today, investors have a wide range of online trading options to choose from. Trading can be divided into three categories, including short, mid and long-term. Short-term represents trading that lasts a few weeks, mid-term lasts for several months and long-term involves holding securities for up to several years. The type of online trading you choose as an investor should be dependent on the available funds, not forgetting that each comes with its unique merits and risks. Below are some of the best online trading platforms you can take part in.
The greatest advantage of stock trading is that it is a long-term investment and investors have the time to grow and hone their skills. Also, the strategies used more than two decades ago are still the same ones utilised today. The first step is to identify a good stock broker through platforms such as CMC markets and then open an account. You only need to familiarise yourself with the free trading tools available for clients. With the already set online account, get started by taking the plunge and make your first trade with as little as one share. A common mistake with many novice traders is going it all in, trying to score highly while it would be better to start off with virtual trading if there is little capital to begin with. Many online trading brokers offer stock simulators for virtual trading, and you can take advantage of these. Ultimately, stock trading can be as simple or as complicated as you make it. It is upon you to choose index/low- risk mutual funds, engage your money in options trading or blue chip stocks. Where you invest your funds will depend on your risk tolerance, not forgetting that riskier trades fetch more returns and great losses. Spreading your risk by diversifying your investments can act as a hedge against one stock falling drastically.
It is a common form of online trading that is usually short-term where investors buy and sell securities on the same day hoping stock prices will fluctuate in value, allowing them to earn profits quickly. Although it was initially an investment for the professional traders, technology and multiple online CFD trading sites have made it possible for the non-professionals to trade in the securities. As there are many types of day trading, there are also different traders who specialise in various areas of the trade with the most common including:
• Price action trading
• Rebate trading
• Momentum day trading
• Pattern trading
• Market making
• News playing
Either of these can be a quick way of making huge gains within a short time, and the means you choose will depend on your level of research and the data used to determine the best securities to trade. Day trading is also a noble way of investing for the new investors where they can invest a small amount in one day.
The difference between day trading and swing is that the latter has a slightly longer time-frame than the former in a stock’s price. Swing traders have the willingness to hold stocks for a few hours to more than a day to allow the trends to gain momentum. This form of trading has the potential to draw higher returns than the day trading alternative. In such trades, investors only need to spot trends and take advantage when momentum has gathered. With accurate data and research, this can be a lucrative way of benefiting from the volatility that occurs during particular stages of a trend.
It is one of the quickest ways of trading online where traders are open to take advantage of gaps created on bids and order flows. An investor makes profits after selling at an asking price that should be higher than the buying price of a certain security. Your risks are lower because this is a short-term strategy that involves smaller profits per trade and frequent trading. As opposed to other means of online trading, the profit margin of every trade made is often low, and these can quickly add up. It is, in fact, one of the trading platforms that does not require you to worry about the events taking place in the stock market since trades are almost instant.
Today, technology allows both novices and experts to trade from any location, meaning that once you understand the different types of online trading, you can start investing in a way that is most satisfactory.