What is online trading?

Trading involves the buying and selling of assets. These assets may be company stocks, currencies, cryptocurrencies, commodities, exchange-traded funds (ETFs) etc. Trading is somewhat different to investing: the former often focuses on short-term profits, whereas the latter implies a longer-term strategy.

In the past, whenever traders wanted to complete a transaction, they contacted a broker who made it all happen. There was a lot of shouting over phone lines and stock exchange floors, paperwork that needed filling and substantial fees.

Today, thanks to personal computers and fast internet connections, most trading happens online. Brokers offer online trading platforms and apps which traders can use themselves to complete the transactions. The process is simpler, quicker and cheaper. In fact, online trading has become very popular, and the prospect of quick profits often makes people blind to the risk involved.

So how do I get started with online trading?

First of all, you need to shop around for the best trading platforms for beginners, based on your personal circumstances. What do you want to trade in and does your chosen broker offer this service? Is the platform easy to use? Are the fees clear and reasonable? All brokers listed on Brokerage Compare are regulated and this is the absolute minimum you should look for.

Some brokers give you the option to create a demo account so you can trade with fake money until you’re comfortable to put some skin in the game. Regardless of whether you want to start with a demo account or not, we’d definitely encourage you to do your research in order to understand the key trading concepts . You can even find paid-for courses which offer in-depth insights.

Finally, once you have the account and you’re confident that you know what you’re doing, you can start trading with real money. Always remember that trading is volatile, you can win big but you can also lose big. Before you make that first deposit, ask yourself: how much risk can I tolerate ? This is both about your emotional response to risk and your access to emergency funds. If you were to lose your entire capital, could you handle it mentally and would you still be able to pay the mortgage? You may also want to check the tax policy in your country, so you don’t fall foul of the law.

Bitesize basics
  • Online trading is the use of online platforms and apps to buy and sell assets, with a view to making a profit.
  • Online trading has become very popular and attracts people who look forward to quick and easy profits, but often ignore the risk.
  • Start by educating yourself, then find a platform which offers the services you need at a cost that makes sense to you, and then invest a capital that you can actually afford.

Put Your Knowledge to the Test

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