Stocks and shares trading is a relatively new but rapidly expanding method of financial trading that attracts many new traders thanks to its simplicity and opportunities for achieving good results. Trading stocks has some major advantages over traditional financial instruments because it doesn’t require any previous trading experience and is easy to learn even by absolute beginners.
Another major advantage of the online investing is that traders know in advance what the potential results will be if their trade is successful. It has also opened the financial markets to retail (individual) traders, which has led to a constant increase in the number of new investors.
Trading on a Stock Exchange
As any new market sector that begins to enjoy widespread popularity, online investing has seen a wide range of developments and improvements that make it even more attractive and accessible to various categories of traders.
In addition to the traditional online platforms, in recent years brokers and platform developers have been introducing new tools, features and solutions that allow for the implementation of more complex strategies and subsequently higher results. Among those solutions are the online trading robots, social trading networks and various additional instruments that enable a more flexible approach towards investments.
How to Trade on Stock Exchange?
What makes trading stocks and shares so accessible is the fact that it is easy to comprehend and even novices can quickly learn the basics. Unlike traditional investment methods with this type of online investing the trader only predicts their price movements. For example, the trader has to choose whether a certain stock’s price will increase or decrease within a predetermined time frame.
If the prediction turns out to be correct the trader receives a payout. As the payout they could receive in case the trade is winning is clearly stated at the beginning of the trade, investors know in advance exactly how much they could achieve. If the trade ends unsuccessfully, then only the amount invested in this particular trade is lost. This transparency adds to the appeal of online investing because it gives traders the chance to evaluate exactly how much they could achieve or lose from every single trade.
Trading stocks and shares is largely done via brokers and investment platforms. This has been the cause for some complaints and concerns for several reasons. First of all the fact that trading is growing so rapidly and attracts so many traders opens the door for various frauds and scams. Traders could avoid scam brokers by checking carefully whether the broker is regulated and licensed by the competent authorities for the different geographical regions or the financial regulators by country.
Another issue many have pointed out is the conflict of interest that might arise between the brokers and the traders. The main concern some have on this matter is that brokers might try to manipulate price quotations in order to improve the odds in their favor and minimize the losses they could potentially suffer. Reliable and regulated brokers, however, are unlikely to do that, but such concerns have led to some very positive developments in the world of trading.
What are the Advantages of Stock Exchange?
The risks of scams and fraudulent schemes as well as other issues in the sector have led to the improvement of the trading process. Following a significant diversification in the trading platforms and services, now there is a new innovative solution emerging on the market − real stocks and shares. These exchanges give traders the opportunity to trade against each other and to buy and sell their own deals. This eliminates the broker as a side on the transactions and providing real and competitive market price quotes. The rates are determined by the traders who compete among themselves to offer the best potential results.
Therefore the whole trading process becomes much more transparent and fair. With such a true open-market exchange traders don’t trade against the broker but against each other.
Although a relatively new niche on the financial market, trading stocks and shares is quickly expanding its market share and is turning into one of the preferred choices for traders across the world. With the significant improvements and innovations in the platforms, services and available tools, it will surely keep attracting many new followers.