What is online trading?
Online trading is basically the act of buying and selling of international currencies, stocks, commodities, or any tradable financial assets through an online trading platform. These trading platforms can be accessed by anyone who has a computer, internet connection, and a good financial history.
Prior to these internet based platforms, investors had to trade through brokers, in person or via telephone. A broker is a person who is licensed to buy and sell stocks through an exchange, gaining profit from commission charged with doing so. This kind of practice is proving to be less efficient since online trading usually provides real time updates on the current trend in the market, thus cutting losses and giving more accurate data and analysis.
Online trading platforms are normally provided by internet based brokerage firms. These firms earn profit either from charging commissions or through spreads, some even a combination of both depending on the broker. These online brokers also offer certain leverage in trading. Leverage is the amount of money you can borrow based on the money that you have, giving you an opportunity to trade with a higher price than what you currently have. For example, having $100 with a leverage of 100:1 allows you to trade up to $10,000 resulting in a higher profit. As tempting as it seems to trade with this amount of money, having a high leverage can also work against you and cause a greater loss that is why knowledge and skill is essential to become successful in this field of investment.
Different Aspects of Online Trading
Online trading deals with several different financial instruments like foreign currencies, stocks, and commodities. Foreign currency exchange or forex is usually done in pairs. It is basically done by buying a certain currency while it has a low exchange rate, then selling it when it has a high exchange rate compared to its pair currency.
Stocks trading, on the other hand, involves investing in stocks from companies to get a part of ownership. Investors earn profit from selling their owned stocks at a higher price once the company they’ve invested on grew its business. Another way investors gain profit from their stocks is through dividends. This is a payout usually done by companies to their stockholders with a portion of their income to return capital to their shareholders.
Lastly, commodities trading fall into four categories in the primary economic sector. These include metals, energy, livestock and agricultural products. Commodity traders take risk in investing in goods based on forecasted economic trends. Similar to the other types of trade, commodities are bought while they have a lower price and sold when their equivalent price rises. Commodities trading is affected by several factors, including but not limited to supply and demand, weather, and exchange rate.
Online Trading Is a Very Broad Topic
Despite the saying that anyone can become an online trader, research on the topic is a must before they invest in this kind of business. It is also upon the investors to look for a reputable and reliable online trading platform that could assist them in minimizing their investment risks and maximizing their profits.
Good thing that looking for a trustworthy online trading platform is not a problem anymore. At Trade12, you can secure not only your money, but also the future of your investments! With a lot of bonuses, flexible spreads, margins, and the best leverage, you need not to look for anything more. Just register for a live account and start growing your money. With its numerous reviews, testimonials and ratings, you could certainly attest to the reliability of Trade12. And it does not end only with trading! Trade12 also offers the most comprehensive market updates and offers e-books, video tutorials, market news and analysis that could certainly help widen your knowledge in trading. Open an account now and start enjoying the best online trading experience that only Trade12 can give you!