UNDERSTANDING ONLINE TRADING

A little old story holds that Joseph Kennedy sold all the stock he owned the day before “Black Thursday,”Black Thursday marked the beginning of the devastating crash of the stock market experienced in 1929. How did Kennedy know what was in stock in bad shape? Back then, the stock markets were corridors for only the rich and wealthy. Therefore, when a shoeshine boy hinted that he owned stock as well, Kennedy figured that if he could afford to, something must have gone terribly wrong. Turned out he was right.

Fast forward, close to a century later and so many developments have shaped the stock market and just about anyone can now own or trade in the stock market. The internet has broadly enhanced the way the stock market trades through online trading. But what exactly is online trading?

Online trading, at the very basic interpretation, is the buying and selling of financial securities, currencies or/both with the help of Internet-based intermediaries or brokers. Online trading accelerated in the 90s with the entrance of high-speed internet and more computer connections.

The online brokerage platforms offer a series of financial product to choose from including, shares, commodities, indices, and forex. Shares are perhaps the most commonly traded products of these commodities. A share is a fraction of a corporation, and by buying a piece of the corporation you became a shareholder. This kind of buying and selling is practiced both in brick and mortar offices and now on online platforms.

The main difference between trading online is that though you are still using real money, an online broker replaces the human broker you would meet on a trading floor.Several firms offer brokerage services and information regarding trades.

Selecting a trusted online broker is one of the key things that you must give consideration. The broker carries out the actual trade on your behalf and stores your money in an account. Over the years, there has been mergers and acquisitions in the online trading industries.

Among the leading stock markets, the world which an online trader is likely to come across is NYSE(New York Stock Exchange), The Japanese Stock Exchange, NASDAQ among others.

There are also a number of important factors to consider before engaging in online trading including

Amount of money you plan to invest

In most cases, firms will ask for a certain amount of money in order to open an account.Others will require that you maintain a minimum amount in the account.

How often to trade.

Ordinarily, just one stock will not make you enough money. Since the investment involves anticipating, it would help to be a frequent trader as markets change from time to time.

Electronic currency trading is also a common online trades, which use technical and fundamental indicators to speculate on the movement of leading world currencies. This method primarily uses electronic based systems and therefore trading takes place pretty fast. By so doing, traders are able to cut losses and make profits within a very short time.

Evidently, with the evolution of technology, several options of doing business are being placed at the hands of the people.

 

 

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