Common Forms of Trading Explained

It’s no secret that the stock market has been on an upward tick for the last 8 years or so. In fact, this is one of the longest bull runs ever on record. Usually you would think that a continuously rising stock market would instill comfort and confidence for new and existing investors, but often times the opposite is true. Many people, often older individuals closer to retirement, are worried about the ole “what goes up must come down” adage. There is a concern that the markets will correct themselves any day now and they will have bought high and either be stuck with, or selling, low. Rest assured that betting on equities and FOREX with a sound method that takes advantage of some dollar cost averaging is usually the way to go. Consider the tips below if you are still on the fence.

Spread Betting Explained

Spread betting is very similar to regular stock market trading, except that you have a lot more options in what you can invest in. For instance, with spread betting you can deal with numerous markets of varying complexity, yet you can also initiate trades with large well known companies like Apple and Netflix, and then in commodities like the precious metals (think Gold and Silver). You can even work within foreign exchanges, which are also commonly referred as Forex, and then place bets on options, interest rates, binaries, and indices similar to the NASDAQ

Spread betting is all about analyzing and understanding the movement, up or down, of a given market or indices. Once you feel you have a firm grasp on the market you then place your money on said bet and hopefully watch it grow from there. Often times it’s useful to work with companies like ETX Capital when getting into something new and/or complex like spread betting. An experienced broker can reduce the barriers to entry for beginners.

Forex Trading Explained

Forex trading can also be a bit daunting to novices, but when utilized correctly it can be a useful tool to build wealth and retirement savings. Just keep mind that there are always risks involved, and have a goal and exit strategy planned out in advance.

This is another area of trading where an experienced online broker comes in handy. The currency markets are “perfect” in that we no longer have any benefits of arbitrage, but that doesn’t mean that these markets don’t fluctuate greatly each and every day. It might even help to subscribe to large financial publications both in print and online in order to stay abreast of what is going in the world each day and how that will impact your currency investments.

Online Stock Trading Explained

Good ole’ fashioned equities are the bread and butter of the trading industry. There are players, both big and small, that are scrambling to reduce fees and increase transparency and investment tools in order to win over new customers. It costs merely pennies to affect a trade these days, and it can all be done within minutes and from the comfort of your own home.

I had mentioned the importance of dollar cost averaging earlier. This is a hedge against market fluctuations. The thought is that if you invest a similar dollar amount around the same period each day, week, month, or year, then your returns will average out over time and will avoid the susceptibility of trying to time the market.

Regardless of what form of trading you decide is right for you, or if it’s all three options mentioned, you need some game plan that involves investing your hard earned money otherwise you will watch inflation eat into its value over time.

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