Gone are the days when stock markets required brokers. As in many other areas, online business has taken over, so today you can buy and sell stocks with one click. Following the fluctuations in the market has never been so easy, since most of us, if not all, are using mobile apps for every activity regarding trading.
What do people trade most today?
When reading online articles, you’ll find that most of the trading today revolves around CFDs. No doubt, they are at the top of the industry. The main advantages that put these at the top of the online market industry are the way they operate.
Margin, or the minimum amount of money you need to put as a deposit to open a position and start trading, generally varies from 2% to 20% of the assets it mirrors, providing the opportunity to gain an amount of market exposure by investing a small amount of the total trade value. Thus, with a small amount of money, you open a position much larger than the amount you had to invest, which greatly increases your potential gains. But they also multiply your losses as much as your gains.
However, by choosing the right trading methods that most of today’s top brokers offer, your losses should not outweigh your gains and you will always keep things under control.
Although this sounds promising, we should state a risk warning before we continue. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading them.
Losses may exceed the value of your position. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money. So, as is the case with, for example, cryptocurrencies, it is highly suggested to prepare (learn as much as you can about it) before choosing to invest.
It is also important to find a suitable, safe broker. To see what should you keep in mind and how to find one visit brokercomparison.com.
When it comes to trading, are there any differences between the UK and the US stock trading?
As for the differences between these two, recent research has been analyzing the difference between UK and US investors. Here’s what they’ve found out.
UK
A quarter of investors from the UK said that they decided to hop on the investment train between the ages of 26 and 30 years old. More than half of them have decided to do so because of the positive examples they’ve had around them (friends or family), the rest was influenced by online content. Such is the power of social media and other platforms people worldwide like to read content on. When asked about the main reason for performing this activity the interesting point was that almost 75% said that they were inspired by the possibility of earning large amounts of money. The rest were just up for a challenge.
US
One would think that there’s a huge difference between these two, but in reality, there’s not much. As for the age of traders, it was found that they are just one year younger than in the UK. The same goes for the reasons they got inspired to trade. Friends and family are the primary reason for more than 50% of investors.
More than 70% of investors were in it for the money. Again, similar to the UK.
The only difference between these two was found when it comes to who is willing to take more risks. US ones are willing to take more risks when it comes to trading. A little less than in the UK.
There are a couple of reasons why people do online trading, but the majority of them are related to the possible profit. Other reasons are listed below…
1. It’s simple
It is open to anyone with internet access. All you need to do is open an account online and trading can begin.
2. It is convenient
You can trade anywhere, 24 hours a day, seven days a week. The stock market is available to you anytime and anywhere.
3. You are in control
You are in control of the invested money. Considering that as an investor you will spend more time investing than market research, there are online companies that will support you.
4. It’s cheap
Online trading eliminates the demands of a real stockbroker, so investors can save money on commissions.
5. There may be “hidden” costs
Although trading costs may be minor, you still need to account for potential hidden costs. In online trading, you are on your own and you pay for mistakes.
6. There is no getting rich overnight
Do not expect success at the very beginning. Becoming a successful online stock trader requires patience, time, and discipline.
7. You need a plan
To succeed, it is important to make a long-term and short-term plan that indicates the strategy you will use to weather the “storms” of online commerce.
8. You also need time
Depending on the transactions, you will need to invest time to learn how to use all the platforms in the online trading system.
9. Beware of online scams
We are aware of frequent hacker attacks, the consequences of which can be great. Secure and protect your data to protect your finances.
10. The system may crash
Although it is a rare occurrence, the online system can crash in the middle of your activity. Therefore, create a “backup plan” in advance.
All the above-mentioned reasons are why people opt for online trading. However, on the websites where you can access the platforms, there is usually notice about the license and the competent supervisory authority. It only means that a certain entity has met the initial conditions for work and received approval that can be withdrawn if it is determined that it has acted contrary to the legislative framework. This does not mean that the regulators guarantee the safety of trading on platforms, although certain wording may lead you to such a conclusion.
