The world of trading has long been reserved for those with a high purchasing power, with financial knowledge and with a lot of free time to dedicate to it.
By MiamiDiario Newsroom
However, thanks to new technologies, this has changed and now anyone with minimal knowledge of the financial markets can become a trader and trade online from home.
But do you know what online trading is? Basically, we can define trading as the exchange of financial products in a certain market, for example, stocks, currencies, raw materials, etc. Unlike traditional investing, trading has a more speculative connotation.
To practice trading online, it is convenient to know the financial assets in which we can invest and the functioning of the markets in general and learn to manage risks well to avoid losing more money than we can afford.
Therefore, it is of vital importance that the trader access good training and practice strategies before investing real money. Currently many business schools offer training in trading, but it is not necessary to pay large amounts of money to access good quality training.
Most online brokers, intermediaries that make our orders reach the market, offer free courses without obligation and even without the need to become a client. This type of training is offered through tutorial articles, face-to-face seminars or webinars.
Likewise, brokers usually facilitate the opening of a free demo account to learn how the market, the trading platform and the broker itself work using virtual money.
Factors to consider when choosing a broker
We must choose our broker well so that we do not get a surprise regarding the collection of commissions or to protect ourselves from possible scams with dramatic consequences.
To choose the right broker, the first thing we must check is that it is an entity registered and authorized by regulatory institutions, such as the British FCA. In the case of Spain, we must make sure that it does not appear on the list of financial bars published by the National Securities Market Commission (CNMV) and that it has been authorized to operate in national territory. It is also recommended that the broker's bank accounts be in the territory of the European Union, for greater security of the funds.
Also, we must make sure that you use a simple and efficient trading platform, such as MetaTrader, one of the most used by professional traders. Last but not least, we have to keep an eye on commissions.
Basic features of trading
Online trading offers the opportunity to invest in various assets, including Forex. This is one of the most popular markets among traders, but there are some characteristics of this market that we must know:
- It is a very volatile market and therefore with greater risk, although this depends on the currencies chosen.
- It is open 24 hours a day, five days a week.
- Large trading volume, which gives us greater opportunities.
- Allows you to invest with leverage.
We can also choose to invest through CFDs or contracts for difference in all types of assets. These are some of the advantages of this financial instrument:
- Access to leverage.
- It allows trading both short and long.
- Available 24 hours.
- Diversification
- The underlying asset is not owned.
Risk management
Good risk control is essential in online trading. To achieve this, we must follow these tips along with common sense:
- Make a trading plan and follow it no matter what
- Don't use money you need to live.
- Do not risk more than 5% of the capital in a single position.
- Always place stop loss to limit possible losses.
- If we chain several losses, better to disconnect and take a break.
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