The conductor of all traders, which helps to gain access to the exchange, is the broker. To succeed, you will have to make every effort and make the right choice among a vast number of companies.
Experts in trading of individual stocks are sure that finding a broker determines half the success. It is tough to make a profit if you do not enlist the support of an experienced, reliable brokerage company that organizes the trading process in a quality manner.
How convenient it will be to conclude transactions via the Internet is mostly determined by the technological equipment, as well as the level of professionalism of the broker. Primarily the client’s income level depends on the right choice.
Before agreeing on stock trading, it is worthwhile to carefully study the level of functionality, as well as the quality of trading platforms. Moreover, you need to familiarize yourself with what analytical reports the broker provides, as well as what resources and policies will be required to study the market situation.
Mastering the methods of analysis
When a company is chosen to play the stock exchange, a beginner will have to master the techniques of studying and analyzing course movements and its prospects. In most cases, methods of technical and fundamental analysis of finances are used for these purposes. The first option is based on a review of the dynamics of the rate of financial instruments. The second method of analysis of stocks online involves studying the influence of fundamental factors on the change in value. Among these factors, we should mention:
- refinancing rates;
- various political and business events;
- economic events;
- the situation in the stock market.
The essence of online stock trading and investing in trading is reduced primarily to the development of a specific trading plan. Before starting actual research work, the trader must decide what strategy he will use or what indicators and online brokers he will rely on. This will have a significant impact on the search for moments of entry into and exit from the market.
Specific features of online trading
Just a few decades ago, bidders and investors, to complete a purchase or other transaction-based on mutual profit, met in huge buildings where exchanges were located. With the development of Internet technologies, the need for this has disappeared. Today, to trade stocks, it is enough to have a personal computer connected to the Internet. There is no need even to leave the house.
Online trading via the Internet allows you to:
- receive relevant analytical data;
- apply the latest economic news;
- use political news about all markets without any limits;
- use the acquired knowledge for profit.
This is a serious advantage for both beginners and traders who have already achieved success.
Moreover, when making transactions online, users get access to a wide range of tools to sell their shares. All rate changes are instantly displayed on the chart. For analysis, it is easy to connect various indicators and other tools to it.
However, there is an exchange game via the Internet and a significant drawback. In this case, the trader is deprived of the opportunity to receive information about the most accurate rates of a financial instrument. Often dishonest brokerage companies mislead their customers by displaying on the charts transmitted to them the not entirely plausible market situation. You can usually read the news about the retirement of such brokers from the market.
That is why experts do not recommend trading through dubious companies. Otherwise, you will have to regret the lost money.
Top 3 financial tools
According to Google, the market of financial instruments used by online brokers allows you to carry out sales transactions with various financial instruments. Below we mention the options that can be called the simplest ones.
Currency exchanges trade in currencies, or rather, in pairs. The foreign exchange market has no localization, and trading is conducted in the interbank market. There is no need to invest a lot of capital to become a free member of the trade – you can start playing on the Forex exchange with $ 100 on a brokerage account.
There are several nuances of trading in the foreign exchange market:
- most platforms work around the clock five days a week. Bidding stops only on Saturday and Sunday;
- a massive number of diverse strategies that allow you to earn on different periods;
- There is an ability to use borrowed funds and various credits.
For this, a unique tool is used – leverage, which helps to carry out transactions for an amount significantly exceeding the amount deposited to the account.
Shares are securities, the acquisition of which confirms the contribution of funds to the total capital of the organization. Such financial instruments make a profit in the form of dividends, as well as the balance between the sale and purchase prices.
Stock trading is carried out on the stock exchange. At the same time, individual transactions can be carried out both via the Internet (online) and offline (in exchange buildings located in:
- New York.
In this case, the size of the deposit from your personal finance required for trading is determined primarily by what securities the trader wants to buy. Some shares are quite inexpensive, so a small deposit is enough for their purchase. However, most securities have a high value. Therefore, when somebody trades them, he will need an earnest deposit.
When deciding to trade stocks, one should not forget that after dividends are paid, they substantially lose value. Often, the depreciation reaches 30%. It is mentioned in most guides for the starters.
Futures are derivative securities. They are traded on the same market like as stocks.
Futures are a contract, according to which one participant in a transaction commits itself to transfer a particular product to another through an agreed period at the cost fixed in the issue of the futures.
The time when the futures are settled is called the date of expiration. In this case, the goods are redeemed without fail. If the price rises during the period of security ↑, the trader will make a profit, if it falls ↓ – loss.
However, today, the purchase of futures does not mean that during its expiration, any goods will be delivered. At this moment, the securities are redeemed, and the result is recorded – profit or loss of the savings.
The presented list of financial instruments is not exhaustive. Each trader can independently choose the one that suits him, depending on the volume of cash invested in trade.
How to choose the right strategy
There are a considerable number of strategies for playing the exchange. The choice among them depends on the period used, as well as the selected financial instrument. The following are trading strategies that are suitable for playing in all types of markets.
The strategy of following the trend
A trend is a trend in a financial instrument. It allows you to assess the expectations of the crowd, that is, the totality of traders playing on the stock exchange. Following the trend is the most popular way of trading.
The rationality of opening deals in the direction of the trend is intuitive. In fact: a move against the market could lead to a crowd sweeping away the trader. Therefore, the most logical option is to follow the trend.
An example of a trading plan based on the principles in question is a game on the exchange in an equidistant channel.
When the penetration of the previous top is revealed on the chart, it is necessary to open a deal. In this case, the course is to achieve the upper boundary of the channel. You can find it by drawing a straight line at a breakdown price.
Enter the market only when the candle closes, which broke through the channel. If you do not follow this rule, the signal may be false. That is, the candle, leaving a shadow, will return to the channel.
It is not necessary to look for suitable moments on your own. You can also examine the analytical data available to brokers.
Contra trend strategy
Allocate a separate group, which includes several strategies that involve opening deals in the opposite direction to the primary market trend.
Experts do not recommend novice traders to trade in this way.
The essence of this group of strategies is that deals are opened in the opposite direction to the current market trend. At the same time, the trader expects that the direction of the course will change shortly.
On the one hand, this behavior makes the average entry price more profitable.
On the other hand, the market can move in one direction by an infinitely large number of points.
A severe drawback of this group of strategies is the massive ↑ risk of losing money.
A lot of brokerage companies offer to earn income on the exchange without conducting independent trading, and it is enough to use the PAMM-accounts service. To start drawing, you need to choose an object for investment, invest, and wait until the profit is formed.
The profitability of PAMM accounts can vary significantly. However, experts do not recommend to invest in the event of a promise of a monthly profit of more than 30%.
Do not forget: with increasing profit size, ↑ and the level of risk grows.
Trading with fundamental analysis
Another category of investment strategies is trading using the principles of fundamental analysis. At the same time, the trader plays on the stock exchange based on a review of the economic situation. It focuses on long periods – from several weeks to several years.
A game using fundamental analysis is not suitable for traders who do not have experience. Not everyone can form a great idea of the situation on the exchange.
How to use the latest news while online trading
Exchange trading with the help of news usually does not present any difficulties for traders. This does not require the user to have dangerous knowledge. At the same time, such trading is capable of generating sufficiently large profits. For successful trading, a novice trader should:
- take news only from reliable sources;
- follow the news constantly;
- use new information should be instant;
- understand that the market situation is changing very quickly.
But playing the stock market through news analysis has a serious flaw. News is not published every day. Therefore, to ensure a stable income,
The notion of pattern
Another way to get income through trading, suitable for beginners, is trading using pattern analysis.
Patterns are figures that form a chart of the course of a financial instrument. The appearance of the pattern may indicate the continuation of the existing trend or the emerging reversal of the chart.
Patterns are easy to spot on a chart. Trading with them does not require serious experience in trading. Identify the entry point to the exchange and calculate the Stop Loss and Take Profit levels; even a beginner can do it.
Let us consider the two most popular shapes.
Head – shoulders
This figure represents a situation when the course chart reaches a maximum, after which the direction of the price changes. As a result, two shoulders and horizontal necklines are formed on the graph. It remains for the trader to measure the distance between the head and neck, set it aside in the direction of trade as the Take Profit level.
This pattern represents a specific corridor. In this situation, the course first goes in a particular direction, after which the lateral movement begins. Entering the market is necessary when breaking through the corridor. After that, it remains to measure the distance between the levels of support and resistance and set aside from the last line in the direction of the course. Here you should fix Take profit.
The trader needs to study the maximum number of types of strategies carefully. This will help to make the right choice.