Online trading is the process of selling stock, shares, and other financial products (Forex, CFDs, Oil, Gold, Cryptocurrency, etc.). Trading used to be a chaotic process and it was an exclusive preserve of the super-rich. Now, anyone who has a computer can participate in online trading. Thanks to internet. Without human intervention, you can sell or buy different financial products.
A share of stock is the tiniest piece of a corporation and buying the shares of a company means you are investing in the future of the company. Initial public offer is the first time a company is offering its shares for public sale.
At the end of every business year, companies can either share their profit among shareholders or re-invest it in their business to make it bigger. When they decide to share it among shareholders, it is shared in the ratio of the number of shares each shareholder has and it is known as dividend. Stocks that yield annual dividend are income stocks while stocks that are meant to be re-invested are growth stocks.
While in common terms, trading means selling. When it comes to online trading, trading actually means both selling and buying of different financial products. Prices of stock don’t remain the same for long. The prices are dynamic. They either go up or come down.
Whether the prices go up or come down, you can make money in both ways. Making money in online trading is about predictions. When you see a sign that the price of a particular stock will fall, and you have it. You will quickly sell the stock off at the current price and buy it back when the price has crashed.
On the other hand, when you think the price of another stock will increase soon, you will buy a lot of it at the current price and sell it off when the price increases. Those are the simple ways to make money from online trading.
Now, the question is, what and what determine the rise and fall of stock prices? There are several factors that influence these prices indirectly. The economy, credit market, the performance of the company that owns the stock and several other factors determine the demand and supply of the stock. However, it is the demand and supply that really change the prices of stock. When the demand for stock increases beyond its supply, the price of the stock will keep rising.
On the other hand, when the demand for a stock begins to drop, its value will continue to drop. There are so many reasons that can boost or reduce the demand of stock and other financial products.
How online trading really works
Buying and selling of commodities and financial products are done on a platform known as an exchange. A broker is an individual or a company that is licensed to trade different types of financial products through an exchange. Most brokers such as MarketGBP offer a wide variety of financial products like Forex, Indices, Commodities, Oil, CFD, Gold, Cryptocurrencies and shares.
A little about Forex
Of all, the most popular arm of online trading is Forex. It is simply a profitable foreign exchange trade. In Forex, you will buy a currency with another currency. You buy currencies at a lower rate and sell them off at a higher rate.
There are so many brokers now that have made online trading easy. You can do it on a PC or on your mobile device. You only need to deposit a certain amount of money in your account with your preferred broker. It is in that account that you will be taking money for trading.
As you keep making profits, it will be added to your account balance with the broker. You can always withdraw your money into your local bank account anytime. While you can make a living from online trading, you can also lose all your money. Therefore, you must seek guidance in online trading.