Standard online share trading can be extremely profitable, as long as you are doing it right. Many novice traders get discouraged by the amount of information they need to go through. However, we believe that you are properly prepared, trading shares online will be a piece of cake. So, today we will do exactly that: observe the whole scope of online share tradings options and solutions.
What is Standard Online Share Trading
The online share trading standard process is simply an act of buying and selling shares and stocks from your PC, laptop, tablet or phone with the goal of making a profit. The trading process is controlled and managed by a set of institutions known as the stock exchange. You might already be familiar with the most recognized ones, such as the New York Stock Exchange or the Chicago Stock Exchange.
Back in the day, anyone who wanted to participate in trading on shares had to physically show up at the exchange to do so. Needless to say, not everyone was allowed in — you would have to be registered as a stockbroker to participate. The trading process itself was very hectic: remember a large screaming crowd mostly wearing matching jackets in the old movies? This crowd of brokers gathered in a place referred to as the pit, from where they catered to their clients over the phone.
Luckily we’ve come a very long way since then, and literally anyone can profitably trade shares from the comfort of their home or office. Anyone can, but not everyone will. Because in order to become a really successful trader, one has to go through a decent amount of information and training.
But once again, just like we don’t have to go down into pits, there is no need to go anywhere special to access all the necessary info. All you require is a confident mindset and the will to absorb a load of information. Once you’ve got that straighten out, it’s go-time.
The Advantages of Trading Shares Online
The biggest asset of all online share traders is, of course, convenience. Since pretty much everyone has access to the internet and even the most minimalistic gadget, online trading can happen anywhere at any time. With that said, you should still make sure that you have a relevantly distraction-free space to trade in, because while modern trading in share market is convenient, it still requires effort and concentration.
Another advantage of share tradings online is the processing speed. In a matter of minutes, you can process an entire trade and gather profits accordingly. This also concerns all supporting tools you might use in the trading process, such as special calculators, technical indicators, signal sources and so on. With a click of a mouse, you can get access to the most recent data and build effective trading strategies based on it.
A lot of professional share traders will also argue that one of the main advantages of online trading is unlimited possibilities. Considering you have a sufficient set of skills and a visible sum of money to operate with, you can reach virtually any hights. Of course, it will take time for you to trade intuitively, but even when the process of trading shares isn’t exactly smooth it can still be profitable.
Anyone who is starting to trade shares online will agree that it can also be quite interesting. The market analysis will include things like performances of different companies, their policy decisions and new tendencies in the business world. Even those who were very far from the entrepreneurship will shortly feel like experts when talking about the moods of the market or the release of the new product that lead to a spike in the index growth.
Finally, by finding a broker who cares about your trading awareness, you will make sure to always stay on top of your game. Whether it is free practice tools, an ongoing supply of learning materials or expert advice: having stable support from your service provider will never hurt. So, let’s take a few moments discussing what you will need to consider when planning to begin your shares trade.
Where to Begin
The very first thing to contemplate is whether standard online share trading is something interesting to you. There is a variety of markets to trade in, some are more transparent and accessible, others complex and tricky to get into. One thing to keep in mind, however, is that you will need to be patient on absolutely any market.
Victories only happen to those, who manage to get up after falling down. Adopt a philosophical mindset of treating mistakes and setbacks as valuable lessons, and you are golden. And apart from the correct mindset, you will also need to gather a handy toolset, starting with choosing the best broker for trading on shares.
Find a Shares Trade Broker
The broker is essentially your guide into the world of trading. It can be an individual or a company, but their tasks remain the same: to give you access to the market, supply all the necessary tools and, ideally, ensure that you have enough skills and knowledge to succeed. Because legitimate brokers care about your profitability almost as much as you, since the more you make, the more they will benefit.
Reputable brokers are identified by several criteria. The very first indicator of the broker’s trustworthiness is the amount of time they spent in the industry. Thousands of illegitimate brokers exist only to make some money from anyone gullible enough and then disappear. One good way to filter out the oldies among the tons of fraud is by checking how far their website can be tracked. Use an online archive to observe how long has the site existed and how much it grew.
Growth and adaptability are also very important for any well-established broker. The market is always evolving and expanding, so it makes perfect sense that anyone who is in such close proximity has to constantly develop as well. A great example of how adaptability can play a huge role in the trader’s success is the stories of two very similar companies: Blockbuster and Netflix. While one went from slow death to complete bankruptcy, the other flourished and faced record value in 2020 during the unraveling of the global COVID-19 pandemic.
Last but not least, a good broker will never charge for things that can easily be free. For instance, there is absolutely no need to take a fee for educational materials or demo account creation, because the trader can simply go elsewhere and access them without any obstacles. Learning especially should be free, as it is merely the presentation of opportunity, not an actual opportunity. A trader has to take their own responsibility in the learning process and will also have to make their own decisions in order to become successful.
Install a Trading Shares Platform
Next on the checklist is the bread and butter of any trader: the trading platform. There are a lot of options out there, so at first, it might appear impossible to make the right choice. However, the good news is that if you found a solid broker, chances are they will grant you free access to an effective and modern trader share platform.
This platform will become your main gateway to the trading process, and it should match the three following characteristics:
Simplicity. Without a doubt, trading platforms accomplish very complex tasks and require advanced programming to run effectively. However, no matter the developing effort, for users it should be as straightforward as possible. This will include easy to navigate menus and clear visualization, as well as an option to adjust the settings to your liking, so the most required tools are always close.
Functionality. Although trading charts can tell a whole story about any particular instrument, or an entire market in general, additional tools will also be required. For example, the technical indicators, which are built-in add-ons that perform a whole variety of tasks. Every indicator is designed to extract specific information from the chart and use it to confirm the ongoing situation or forecast the upcoming events.
Speed. You will only be able to experiences all the advantages of trading shares if your platform is up to speed. The market at times can be hard to stay on top of, which makes it your platform’s job. In a nutshell: as long as you are sure that the chart in front of you is properly reflective of the current events and every position takes no longer than several seconds to reach the broker, you should be ok.
Choose a Strategy
The next step on your journey to productively traded shares is choosing a strategy that will work for you specifically. Trading strategies are sets of rules and conditions to follow while trading. A thought-through strategy will give you an idea of when and why you need to open a position, how long you should hold on to it for, what are the possible points of exit, and what are some risk management techniques that could be implemented.
Finding the right strategy might take time, however, if you are dedicated to making the correct selection, your efforts will pay off. Many professional traders confess that they stuck with the same method for years, as long as it proved to be effective. Although it is still fair to mention, that no matter how effective your strategy is, you should always stay on the lookout for new approaches and solutions.
In order to narrow down your search, consider by learning about the different categories of trading methods first. As you will see in the next segment, these categories vary on the amount of required time, budget and skills.
Day Trading Strategies
Day trading strategies summarize all methods that focus on closing all positions within the course of one day. Due to a limited amount of time and the lack of desire to pay nighly charges for carrying the position over to the next day, traders came up with hundreds of approaches to make maximum profits in minimum time.
The most extreme subcategory of the day approaches to standard online share trading is called scalping. As you might have guessed from the name, scalping focuses on shaving off mere points off the chart and later gather them into one visible profit. Such approach is made possible by minor fluctuations in the price caused by a continuous tug-of-war between the bulls and the bears. A scalper would consider it a victory when the price does a small leap into the required direction, even if it doesn’t align with the overall trend.
And the least extreme approach is to open the position at the start of the day and close it by the end. The setups for such trades can be based on a variety of factors, for example, the previous day’s close, the news from other regions, or the release of significant reports. Essentially, your main job would be, while choosing among day trading strategies, to evaluate your personal time and capabilities and then find a proper match.
Swing trading in trading shares can sometimes fit into the day trading category, however, it won’t always be the case. When you look at the chart and disregard the minor noise, you will notice that the price kind of moves in waves. In actively trending markets those waves are more noticeable as the price goes a good distance from the low point to the top or vice versa.
A significant move from one point to another is called a swing. The task of the swing trader is to try and predict when such swings will take place, and most importantly — where will the particular swing end. One of the approaches is through finding levels of support and resistance.
Support and resistance are the virtual floor and ceiling of the price movement. Traditionally, the price would bounce up from the support and head back down after hitting resistance. But when the price movement manages to break through either of the levels, create new ones and break them as well, the market is considered trending.
A variety of tools can be used to outline these levels, one of which is your own set of eyes. Simply look at the chart and notice the areas on the chart that seem to create an invisible corridor for the price to move in. Keep in mind that support and resistance are not necessarily horizontal, they can also position in the direction of the price movement, especially in trending markets.
Position Trading Methods
Position trading is the most long-lasting and, usually, the most profitable approach to trading shares. It essentially mimics the traditional concept of investing: purchase something at its low and hold on to it until the value rises significantly.
While position trading is very promising, traders need to understand two things. First, the size of your position has to be on a bigger side, not to get majorly affected by minor hiccups in the market. And second, although this method sounds very passive, it still requires a good amount of attention and expertise. As you trade shares, look for all kinds of news concerning your chosen instruments. This will include news, forecasts, signal reports and much more.
Now, that you have a general understanding of what the online share trading standard process might look like, let’s take the last couple of minutes getting technical and discussing how exactly do you trade shares.
Placing a Trade
Share tradings are very similar to any other type of trading procedures. For starters, you should choose the right set of instruments to work with. The best way to make your selection is by paying attention to the most discussed instruments both on your broker’s site and among the entire trading community. For example, FAANG technology stocks, also known as the big five, are a collection of very promising indices: Facebook, Amazon, Apple, Netflix and Google are nearly always in the center of everyone’s attention.
Once the instrument is picked, analyze the market to decide what kind of position you want to open. Market analysis is a whole other topic, which you should absolutely consider getting familiar with before you begin trading shares. The most simple way to put it is: analysis will help you choose between buying, selling and abstaining from the market, which is also a valid option, especially in times of uncertainty.
After the decision is made, it’s all just a question of technicality. Just make sure you are familiar with the way your trading platform operates before jumping in, and placing a trade will not be a difficult task.
Pending orders, such as stop loss and take profit, can come in extremely handy in the chaotic trading process. In currency and share tradings pending orders are automated algorithms that execute the trade at requested levels. Stop loss is used to minimize the level of a setback in case the price is moving against you, and take profit helps to lock profits when the target value has been reached. Learn more about the types of pending orders available in your platform to optimize your trading and benefit the most.
Managing Your Risks
Risk is an inevitable part of successful trading. The good news is, the more you risk the larger will be your reward. The not so good news, however, is there will always be a chance of ending up high and dry. That’s why wise risk management is just as important as effective strategy selection.
There are multiple approaches to take. For example, you can divide your account balance into several parts and only trade one or two of them at a time. Or you can set limits of maximum profits in one day as well as maximum losses, and make a habit of exiting as soon as those limits were reached. Just like in anything else in trading, there are endless possibilities, your job is to find the one that works for you.
Trade Shares With PaxForex
When you choose to shares trade with PaxForex, you automatically get access to the never-ending stream of useful information, market news and updates. On top of that, we make sure to give you opportunities to grow every step of the way: whether it is handy for learning material or practice tools to polish off your skills. Stat trading shares with PaxForex today and it won’t be long before you will be able to call yourself an expert trader.