Online trading has gained a lot of popularity in the last couple of years. Ever since the pandemic, a couple of things that have changed include the markets themselves, and the interest of the common person in using online trading to make money. Suddenly, markets became a lot more volatile, there were new entrants, and long-standing market leaders started to face competition.
At the same time, since people were losing jobs, and the internet was really the only way to interact with the outside world, physical traders and new traders alike had nowhere else but the online world. As a result, online trading overall saw a significant increase in numbers. The trend is still going strong and it is likely to continue to do so in the future as people become more accustomed to trading online. If you want to make the most of this avenue then let’s take a look at a few tools that you will want to use.
Trading Platforms
The first thing you’ll need is a trading platform. This is where you sign up and have an account, keep all your money, and where to execute your trades from. This is not to be confused with the exchange that you are trading at. It is the platform that will connect you to that exchange or give you access to the market that you want. In some cases, your exchange will have a dedicated platform but for most big markets you will need to have access to a broker that can connect you to the exchange. The broker will have their own platform that you can use, or you can go for a third-party platform that gives you access to the exchange of your choice.
Research Tools
Once you are registered with a platform and you have access to an exchange, you will be flooded with options that you can buy. There are countless companies in every industry listed on the main exchanges. In order to make a smart decision regarding what you should buy and what you should stay away from, you will need some tools to analyze the different share options. You can get tools to analyze all kinds of financial instruments. Whether you are buying shares, futures, commodities, cryptocurrency, or anything else, make sure you have access to the right research tool for that asset.
To supplement your research on a particular option, it’s also a good idea to see what other experts are saying. There are plenty of online sources for research on trading options, but you need to know what to read and what to stay away from. Sticking to the major publications is generally a safe bet. Once you learn about the market experts in your space it would be a good idea to follow these individuals and keep an eye on the insight that they share.
Charting
A big part of research is charting. This is the process by which you will understand how the market for a particular commodity is behaving and how different assets, for instance, stocks, within that industry are behaving. There are different ways that you can use charting. A popular method is the Heikin-Ashi technique which is a modified version of candle-stick charting that focuses on finding the average prices of a commodity, rather than looking at the high, low, open, and close prices. This makes it a great strategy for those with a slightly longer-term approach but limits its functionality for people that are day traders or those that base their decisions on real-time changes.
Margin Loans
When you start out trading you will most likely be investing out of your own savings account, or you might have set aside some money that you have dedicated to online trading. The problem arises when you have invested all your resources into a few different options, or even a single option, and you suddenly see a huge opportunity in another place in the market but you don’t have the capital to invest. This is where margin loans come into play as they become accessible based on your existing portfolio.
Depending on the kind of loan you get, the lender that you get it from, your existing portfolio, and the regulations of the market that you trade-in, the amount that you are able to raise through a margin loan will vary. In some cases, it might only be 20% or 30% of your existing portfolio. In other cases, it could be 4 or 5 times the size of your current portfolio. This is a fantastic way to increase your earning potential as you get much more leverage. A lot of day traders use margin loans extensively and earn astronomical returns every single day.
Order Types
At the base of it all, trading is about buying, holding, and then selling for a profit. Back when it was all manual, people would have to personally visit the stock exchange or get in touch with their stockbroker over the phone to tell them to buy or sell something. With the introduction of online trading, there has been a lot of development in how orders are executed.
Most brokers will provide the basic kinds of orders. This includes market orders, stop-limit orders, and stop orders. However, some forms of trading will require specialized order types such as trailing stop short orders or short selling orders. Not all platforms will offer these kinds of services, so be sure to look into this before signing up. Also, these kinds of order types can be more expensive to use, so have a look at the pricing and see how this compares to other platforms.
If you are completely new to online trading, then be sure to do your research beforehand and get a better idea of what exactly it is that you want to follow. Look into different markets, different trading options, what is easiest to access in your region, and also what suits your trading style the most. Do you want something that you can buy today and cash out in ten years, or do you want something that you can trade on a daily basis? Look into what suits your trading style. Also, before you risk any real money, try it out in a simulation account. Most brokerages will offer simulation platforms. This way you can get a feel for the market without actually risking your own money.
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