Trading Stocks and Shares – Basics

In the recent years Trading Stocks and Shares has been significantly growing in popularity and attracts more and more traders every day. But what exactly are stocks and shares and why are they so popular? The main reason is probably their simplicity as it no longer limits the access to the financial markets only to people with degrees in finance and economics. Unlike traditional investments where you buy assets and can hopefully sell them later at a higher price to make a profit, in stock trading you don’t buy the assets themselves but predict how their price will change. If you predict the direction of the price correctly − for example your forecast is that the asset price will go up and it does indeed increase − you receive the payout determined at the start of the trade. If, however, your prediction is wrong, you will lose the amount you have invested in this particular trade.

Trading Stocks and Shares, Assets, Expiry Time

With stock you can trade all major assets in the four asset classes on an international scale, all from the same platform. Each trade has a specific timeframe and another advantage is the wide range of expiry times, which can vary from 10 seconds to 1 year. It depends on your goals what timeframes will be the most suitable for you.

The Short Term trades, which usually have expiry times between 30 seconds and 1 hour, offer an extremely dynamic and exciting trading experience because they allow you to place more trades, which in turn increases the potential payouts you could receive. However, if you prefer a more relaxed and patient manner of trading, you could choose the Long Term options. Just keep in mind that once you open a position, you have to wait until the trade expires, although lately some brokers have been introducing “option buyback” and “early closure” features, which allow traders to close trades before their expiry times. Such actions are usually taken to prevent losses in volatile market conditions or when a trade is not expected to work out favorably before it expires.

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Types of Trading

There are three main types of trading that traders should be aware of. The first one is the standard – where you have to predict whether the price of an asset will increase or decrease at the time of expiry. All trading platforms offer this basic kind of trade and it is the most popular among both beginners and advanced traders. Next comes the One Touch trade where you are given a target price and if the asset price reaches the target at least once during the trading session, it will be deemed successful. As the price is always determined in advance by the broker, you will be able to make plans and make an informed decision in order to achieve the best possible outcome of the trade. Last of the three main types is the Boundary trade where the broker gives a range of prices and the trader has to decide whether the asset price will end up within or outside the given price range.

Many brokers offer different variations of these three main types and some could have very high payout rates. However, these more lucrative options are usually harder to predict and entail higher risk, so they are best suited for seasoned traders.

Brokers and Stock Trading Platforms

In order to trade on Stock markets you have to sign up with a broker that provides a trading platform. With the countless brokers flooding the market, it is advisable to do a preliminary research before opening an account.

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First of all it is recommended to choose a broker that is regulated by the competent government authorities in charge of monitoring the activities of financial service providers. Although not all unregulated brokers are untrustworthy or potentially fraudulent, with new brokers and trading platforms emerging on the market every day, traders face the risk of coming across scams. Regulated brokers have to operate in compliance with strict laws and regulations and in case you encounter any problems, you can file a complaint and get assistance from the relevant authority supervising the broker.

Demo Accounts and Risk-Free Trades

Another important thing to consider is whether the broker provides a Demo Account or Risk-Free Trades. This is essential for novice traders because it allows them to learn the basics stock trading and practice without putting their investment at risk until they gain enough experience and confidence to move on to live trading. However, demo accounts are also extremely helpful to advanced traders as well, because that gives them the opportunity to try out different strategies and ideas in a risk free environment. And no matter what your level of proficiency is, trading in demo mode enables you to test the broker’s platform and get familiar with all its features before you decide whether to make a deposit.

Trading stocks and shares is simple, accessible and offers a wide range of opportunities in a relatively short amount of time, however what options would be best for you depends on the goals you have set for yourself. Therefore it is advisable to do careful research, make a plan and, keeping in mind all the points explored in this article, select the broker that gives you the best conditions to achieve your goals.

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