So you’ve decided that trading stocks or options online is right for you. Great! Trading stocks or options online can give you more freedom than the typical brick-and-mortar brokerage because it allows you to trade whenever and wherever you want, as long as you have internet access. How do these online trading platforms work? What are the differences between them? Can online trading help your wealth creation strategies? These are all good questions, and they’re exactly what we’ll answer in this article on online trading platforms.
Intraday trading
If you’re an active trader, investing in an online trading platform that offers intraday trading can help you make money even when you’re not at your computer. Intraday traders typically have access to real-time quotes and trades as well as price history, so they can view how their stocks are performing throughout each day.
Commodity trading
While commodity trading is typically associated with investing in raw materials, it also includes derivative contracts for such manufactured goods as gold and copper. If you think that demand for gold or copper will increase, a speculative trade in futures can make you money. By extension, investing in physical commodities like oil or aluminum can be a smart way to hedge against inflation – so you could profit no matter what happens to your stocks. However, unlike stocks, these trades may limit your downside potential if prices dip sharply; buying on margin may also put you at risk if an investment goes south and prices collapse.
Stocks trading
Buying stocks is a way to directly invest in a company. Buying stocks gives you partial ownership of that company. It's important to know that when you buy stock, your money doesn't go directly to a single business owner or manager; instead, it's divided among all of the shareholders, meaning you are buying stock in a collective of people who own part of that company. This can be useful if you'd like some assets beyond your original investment—if an individual business starts doing better than expected and its value increases, your shares may be worth more than what you paid for them.
Currency trading
Despite their name, currency trading platforms aren’t just for currencies. In fact, there are a number of different types of platforms that all have slightly different features and benefits, including gold, silver, palladium and platinum platforms. However, as with most things these days, it’s mostly about e-trading vs. offline trading. To make matters more confusing (at least at first), if you plan to do online trading in US dollars or euros then you need an online platform that deals in one of those currencies; a typical online commodities platform won’t work. The key thing to remember is that you can still trade all of these assets using an online currency platform—you just don’t see them until after you log into your account.
Forex trading
The Forex market is an international market that allows traders to buy and sell currencies. With hundreds of different markets and exchanges on offer, it’s hard to know where to begin. Whether you want to buy, sell or trade in currencies, here are some useful tips for getting started with Forex trading. Check out our comparison table of online currency brokers and get yourself started today!
Options trading
On a broad level, options trading can seem complicated, but it’s really not—options are an investment vehicle that gives you a contract on future performance. The two most common types of options trades are call and put options. A call option is exactly what it sounds like: an opportunity to purchase something at a set price in a specified amount of time. The higher an option’s strike price, or buy-in cost, is above current market value, the less risky—and more valuable—the trade is; conversely, if you predict that values will fall instead of rise and choose to buy put options (which give you rights to sell), then losses become far more dramatic than gains.
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