CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
April 21, 2020
Shares of famous corporations may be bought and sold over the Internet. Traders capitalize on changes in prices. Here are the keys to legal digital trading.
Modern financial markets are often a few clicks away. With the right software and a brokerage account, anyone can purchase currency pairs, stocks, or derivatives like CFDs. Over the decades, shares have not lost their appeal. They offer two possible modes of behavior: trading and investing.
Stocks are issued by companies in order to attract capital. During the initial public offering, securities are released on the exchange for buying and selling. The purchase of stocks essentially gives ownership of a certain percentage of the business (even if it is only a fraction). Afterward, a shareholder may get profit in two ways. Some companies provide regular dividends. Secondly, it is possible to sell the equity once its value rises. Here, the seller will profit from price dynamics.
The valuation of stocks depends on the company’s performance. An earnings report, for instance, may cause the value to rise or collapse. If a new product has been released, and it is all the rage, share price soars. If sales are nosediving, stock value also falls.
On the one hand, corporate successes could translate into high returns on your capital. At the same time, poor results will cause devaluation. It is therefore not advisable to rely on a single stock. The more different instruments you include in the portfolio - the lower your average risk.
Do not try to outsmart the market. Gaming the system is hardly possible. Therefore, when trading stocks in Thailand, it is best to focus on the most stable shares. These include blue-chip baskets and ‘growth stocks’ from the tech sector.
Investors are focused on the long-term perspective. They buy and hold their assets and the period could span months or years. This way, only the big picture matters. Temporary fluctuations should not have any effect on the holder’s actions. In the long run, the market usually reverts to its average.
Meanwhile, short-term changes are exactly what traders focus on. They will buy and sell stocks quickly, aiming to capitalize on rises and falls in value. Although trading requires focus, time commitment, and persistence, it brings higher returns. Thus, one should start by defining their personal goals and suitable model.
Stocks may be traded in two ways. These refer to the physical and electronic exchange systems. Here is how they compare.
Exchange floor trading is the old-school way of buying and selling, the one shown in Hollywood movies. It may look daunting, with all the shouting going on. In essence, however, the logic is uncomplicated.
Electronic trading is the top choice for retail investors due to enhanced convenience. Digital brokerage platforms allow immediate execution. The need for floor traders is eliminated completely. The requirements are as follows:
The benefits of the online mode are thus clear. Usually, traders begin trading stocks when they already have currency pairs in their portfolio - i.e., they have experience in Forex trading. Like any trading asset, stocks carry their own degree of risk. It is also higher when trading on margin, i.e., with a portion of the broker’s money.
A reliable brokerage provides clients with round-the-clock support and a wealth of educational material. At the same time, one may use copy trading and delegate decision-making to an expert.
Local finance regulations vary between countries. For instance, in Thailand, it is illegal to speculate on Thai baht, but it is perfectly legal to access the stock exchange through licensed global brokers. This company must be registered and overseen by a reputable international entity. Examples are CySEC, FCA, and ASIC.
To start trading, it is necessary to open a live account with a broker. Established international brands with millions of clients are preferable. Make sure you check their legal status and client feedback before depositing real cash.
It is always recommended newbies take time to practice in the demo mode. The risk-free method allows one to practice as long as they need. This includes opening and closing trades, hedging risks, and analyzing financial graphs on the platform.