Interested in Trading?
Trading has become increasing popular by smaller investors due to the advent of Internet trading brokers.
You can now trade directly on the markets without the need to deal with an actual broker, you can trade directly on their web based system. Therefore the brokerage costs are much lower. Also the speed at which you can trade can open up new trading opportunities.
There are many Internet brokers in the market all competing for your business which is driving brokerage costs down continuosly.
If you are new to trading, many of the Internet brokers have a wealth of information on trading techniques and various strategies. Many also will provide you with charting software which typically runs in your browser.
Internet brokers have much lower brokerage fees than traditional brokers.
Technology improvements and easier access to financial markets has allowed brokers to develop some amazing trading platforms that can give you access to not only shares but many other financial instruments to trade. It has also opened up foreign markets to smaller traders.
Many of the platforms will allow you to trade a foreign market in your own local currency, taking much of the complexity out of the process.
Some of the Financial products now available to smaller traders include, Forex, Commodities, Contracts for Difference (CFDs), Spread betting and Index trading. With so much on offer a smaller trader can now create their own type of hedge fund, since they can spread their trading risk across many products and markets at the same time.
If your serious about trading, take some time to investigate the trading platforms on offer. The array of products may surprise you and provide trading opportunities that you hadn't even thought of.
Many online brokers will allow you to sign up online for a free demo account to start testing their platform.
Internet trading platforms now allow you to trade multiple instruments in multiple markets.
Generally you can trade on the demo account using simulated funds allowing you to experience what happens on the live platform in real time without risking any money. Not only is this an opportunity to learn how the system works it also allows you to test your trading strategy in real time.
You have probably backtraded to test your strategy which is great, but there is no substitute for real time trading when emotion comes into play.
Trading platforms also have a lot of functionality thats worth learning in the demo account before going live, such as the various types of stop losses you can place. You may find the vast functionality leads you to adjust your strategy to utilise some of this functionality to further hone your strategy.
Technicals versus Fundamentals
The age old debate between technical and fundamental analysis still rages today.
Fundamental analysis is the approach to trading involving looking at the financial situation of the intrument including a companies financial statements, ratios like its P/E ratio, debt to equity, etc.
A trader will look at the micro economic aspects and also consider the macro economic aspects such as competition, government fiscal and monetary policies and other external factors that could affect the value of the asset.
Technical analysis involves the use use of charts. A trader will look at the history of the price on a chart to try and anticipate a likely future move. There are many tools that technical traders use such as moving averages, bollinger bands, relative strength index, and so on.
There are hundreds of indicators, however traders will generally choose just a couple of their favorites for their trading strategy.
If you are new to trading and wondering how to develop your own strategy and what markets best suit you there are many great books out there about trading. Look for trading books that go beyond how the markets work but also provide advice on how to structure and build your own trading plan.
Most traders use a combination of technical and fundamental analysis.
A trading plan is essential to lasting success in the markets.