Which types of trading methods are available online?
While trading is an activity that has been around for as long as human beings have been, most people picture men in smart suits in high rise offices in the City of London. However, with trading via the internet having enjoyed significant growth in recent years, it is something available to all now and can be a useful investment strategy for someone who has come into money and wants to make the most out of it. These are three ways in which you can trade online.
This is one form of trading that you may well have heard of and involves trading in company shares on the stock market – but you might not realise that it is something you can get involved in. All you will need to do so is a couple of hundred quid at your disposal whereupon you set up an account online – either with your own bank or with another one. If you want to start immediately, you will need to choose the one you already have an account with though. Alternatively you can trade using an online stockbroker, such as Hargreaves Lansdown, but once you have chosen you simply select the company shares you want to invest in and are provided with a pence-per-share price – leaving you to decide whether it is worth the risk.
Despite its name, when you engage in online currency trading, you do not actually physically trade any currency – the whole thing is recorded as an entry on a computer and netted out based on the market price. In the past, Forex – which is the world’s biggest market for currency trading – was the preserve of hedge funds, global corporations and finance firms, but now individuals are trading on it over the internet. When it comes to currency trading, the process is always carried out in pairs, with these representing a ratio between two numbers. For example, the UK pound cannot be traded unless it is accompanied by a second currency – say the US dollar. When the pound/dollar Asset is mentioned, this means how many dollars you can acquire with one pound, with the pound being the ‘base’ of the trade and the dollar the ‘quote’. When deciding which currency trades to make, the respective strength of each is the key factor, although a downside is that this can fluctuate pretty wildly.
This is a form of online trading that has become particularly popular online and involves trading securities – which can range from stocks to debentures and bonds – and sees them purchased and sold within a single day. There are different forms of day trading, including pattern trading, rebate trading and price action trading, but all have the advantage of allowing the smart investor to make sizeable profits quickly. It is a good way of getting started trading online as you can invest small sums to gain experience, but on the negative side, you are very reliant on the accuracy of the information you find about the securities.
With any form of online trading you will improve your chances if you research the subject before committing any of your money.