We are experiencing a very interesting shift in the way we see the world around us. Apart from the effects of COVID-19 on the world, suddenly borders seem pretty meaningless and this is all because of one thing, globalization. We can now perform almost all sorts of tasks remotely, even working. This revolution also gives us the freedom to chase our financial stability, now that we don’t even have to leave our homes to work or run errands, we find ourselves with more time on our hands.
But what can we do with all this extra time? One good practice is to learn a new set of skills, particularly let’s talk about investing. It doesn’t matter if you are a stay-at-home mum, a college student, an independent freelancer, or simply somebody willing to take a few chances into learning something new. With enough discipline, we can master all there is to it about online trading.
Online Trading Basics
Today you don’t need to go to a traditional broker or invest large amounts of capital in order to start venturing in trading assets. There is a new type of trading available to everybody, people like you and me, and it’s called “Margin Trading”. This is a derivative form of traditional trading, where you only need to invest a small percentage of the actual position that you open in any given asset, which is known as a Contract for Difference, or CFD. You can trade on Forex, Commodities, Shares, Indices, and even Treasuries.
But how does it work? Well, the whole process is quite simple. There is a difference between the buying and selling prices on all assets, and this is called a spread. Whenever you open a position on an asset, you only need to invest a small percentage of that entire position, this percentage is given by numbers such as 1:100, 1:500, and so on. This is called leverage.
There are two possible ways to open positions, determined by how you think the prices will fluctuate. If you think the market will rise, then you open a long position. Inversely, if you think the market will fall, you open a short position. At the end, when you close this position, the price you paid when you opened it – the buying price – is compared to the price you pay when you close it – the selling price.
So if you went long and the selling price is higher, then you profit. If you went short and the selling price is lower, you also profit. In any other case, you will result in losses of the invested capital, and sometimes even more than that amount. Narrower spreads and higher leverages, will not only maximize your potential profits, but also your potential losses. So this is a risk worth noting.
How to Get Started in online trading
Without any knowledge whatsoever in trading, it won’t be any different than gambling. So, in order to make smart and factual-based decisions to minimize the risks, you need to familiarize yourself with all the dynamics involved in online trading. Luckily there are several CFDs providers which will guide you through the entire process and offer you robust and secure platforms in which to trade. One of these companies is CMC Markets.
They will offer you a very detailed learning center, where you will go through everything there is to know regarding the online trading of assets. Plus they have a team of elite finance professionals who will help you have the upper hand in trading. Once you are done with your training, and before you go to a live account, you can also apply all your knowledge into a Virtual Account Demo. This is a secure environment with real-life market scenarios, where you can see how your financial decisions play out, without worrying about losing your capital.
Trading from home can start as a part-time hobby, without involving any amount of capital that would hurt losing. But with enough discipline and full-time mastery, it can also become a powerful ally towards greater financial independence.