Who can say to never ever think about trading in stocks in its life? That’s why, sooner or later, in 2020 everybody will ask themselves how to online trading in stocks and make some money out of this relatively new business.
But dreams aside, you should start to understand how online stock trading works in this new technological era to achieve such a thing as profits out of trades. That is why, before investing our beloved capitals we should keep right in mind a few things about online stock trading, starting from what is it per se.
How the Internet Changed Stock Trading
Back in the days, if you had the idea of investing in shares and buying stocks, you’d have to talk to a real person, linked most probably with a financial broker service.
But if before a broker was a person that you might have a chat with, with all the authorizations in order to trade in your name in a specific place; a location where all the magic begins called Stock Exchange Market and with a physical location, nowadays everything changed.
If before you needed to talk with people or be in a specific place like Piazza Borsa in Milan or the (in)famous Wall Street of New York, and to show at a certain time when the trades began, now that’s no longer the case.
There are certain financial markets which do not possess any of the characteristics mentioned above, first of all: they are not located in any physical place, but exist only “in” the internet.
We are speaking about the Over-the-counter (OTC) Market.
The peculiarity of the trades made in this manner is that the trade operations regarding these stocks do not happen in the real world.
That is why the Internet Era and the new technological revolution gave us all the right tools to online trading in stocks and many other financial assets virtually wherever and whenever we want. All we need to do is to have the support of the right equipment, which usually is a smartphone or a personal computer, and the right broker to open a trading account to access a proper trading platform.
How to do Online Trading: How It Works
First of all, if you are completely new to this financial world, you must consider one thing: the stock market, as any other type of market, it’s dominated by the influence of supply and demand.
These two factors influence the financial market, and when there is a shift between supply and demand here we have a price move. Now, if there are more buyers than sellers in the market, it means that the price of that asset will go up, and the other way around.
Now, the financial figure that enables us to trade in the stock market and other types of assets is called broker, and in our case to move forward with our financial objectives in online trading we’ll need an online broker to start.
How to Start Online Trading?
As we already mentioned before, to start trade in online stock trading you’ll have to open a trading account with an online broker.
Before doing that, you’ll have to check the possession of many key features in order to be sure of being in the right hands. Remember, you’re investing your capitals and giving your money to an entity whom you’ll not even deal with in person, so be alert.
First of all, you’d have to do a complete background check of the online broker and see if it shows on its official site the proper authorization to perform its financial activity on your territory. For example, if you are an European citizen, you want to check if the broker is in possession of a CySEC license and comply with ESMA standards.
If you go against this simple principle, you’ll have to face severe consequences such as the complete loss of your financial investment or, even worse, legal consequences.
Once you’re sure that the chosen online broker is legitimate by the proper authorities, if you are a newbie trader a good idea would be to see if there’s a chance of opening a free demo account.
Learning from our mistakes is normal human behaviour and it’s a healthy way to improve our skills, but when there is money involved, this can’t always be the case. That’s why a demo account it’s just perfect to learn. Demo accounts usually work with a virtual balance charged with a certain virtual amount that can be used in order to perform any trade or financial activity allowed on the trading platform, but without being worried about making mistakes or losing money.
Then, if you think to have discovered the right online broker for your needs, you can switch to a normal trading account. To do that, you’ll usually have to provide the broker with a series of legal papers and a bureaucratic procedure which will be very fast compared to those needed in banks and other places related to stock trading, and then invest a minimum deposit, which usually are no lower than $50.
How to Learn Online Trading
Beside practicing with a demo account as we already explained in the last paragraph, there are plenty of ways to inform yourselves and learn how to perform the right trades in online stock trading .
To start with, you should already know that there is on the internet an immense number of e-book which are freely readable and downloadable on many e-library, often offered by the best online brokers to their traders.
Regarding reading suggestions, the internet is also full of specialized articles on the subject and there are many important sites which treat exclusively in the stock market and investment education. Reading also the memos or bios of top investors of financial history can also be very inspiring, and studying their successful techniques may be extremely useful to reach your financial goals.
About top investors, to find a mentor or an experienced friend may be also the key to access to many fundamentals of the stock market which may not be still clear to you, no matter how much you read in the past or informed yourself. Also, a good mentor may have had mentors too back in the days.
If you can’t befriend them, or you don’t know any online trading expert, you may start thinking about learning from an online trading course. Many top investors, as a matter of fact make a ton of money by just doing seminars all around the globe or via online (especially during 2020…).
But still, as William Shakespeare said in one of his lines: “All that glitters is not gold”. On the internet there are too many people whom refer to themselves as bringer of a new miraculous solution to make easy money with zero effort, gurus of trading that will ask you an incredible amount of money to follow their courses How many “revolutionary” methods did we see on the internet sponsored by these so-called expert?
That is why we want to close this article with an invitation to avoid all of those guru with a magic formula, and inform yourselves on practical and doable techniques such as the technical analyses in order t analyse price charts and schemes, so that you’ll be able to determine how a price will change in time and evolve.
And if that’s not enough, you should also think about fundamental analysis, which is a technique that offers a broader view about a specific asset by spotting hidden weak spots in a stock’s balance sheet or the future of a society so that you’ll be able to know not only when to buy, but what is the most profitable asset to buy.