Online trading refers to
buying and selling of stocks through an online platform for trading. These online
platforms are usually managed some brokerage firm and provide an opportunity to
everyone who is desirous of investing his/her money in the stock market and
other investment options. Most of these brokers provide various investment products like
Shares of big companies, Forex, Commodities like Gold, Silver, Aluminum, Copper
and so on.
In the recent years, along
with the trade of shares and commodities, Forex trading is also becoming
popular owing to its specific features and benefits. Forex or foreign exchange means buying a
foreign currency at the current rate and selling it back when its value is more
than what you had purchased it at. This way your investment may earn some extra
bucks, rather than it being lying idle in your bank.
Besides Forex and stock
trading, the new generation is heavily investing in a new commodity called
cryptocurrency. People know the kind of benefit potential that these
cryptocurrencies like, Ripple, Litecoin and the most commonly known one Bitcoin
have in CFD form. Many iForex platforms provide you an opportunity to buy these
cryptocurrencies in CFDs form without even having to buy them physically.
While doing online
trading, all of us would want to make quick profits and tend to ignore the
risks and disadvantages that may be involved in it. Therefore, before taking a
plung into online trading, one must consider these issues – i) what stocks or
commodities to buy, ii) how to choose the right online trading platform and,
iii) how much money is safe to invest. To answer these questions, here are some
guidelines to follow –
Some Do’s while trading
online:
1) Ensure account security - You must reset your trading account password frequently
and also opt for dual authentication to access it. Your trading and demat
account should be in link with your bank account.
2) Do a proper research – Before you invest your hard earned money into
a product, do a detailed research on it and learn about its previous
performances and actual worth. This can be done through various TV shows, stock
market news, articles and other relevant sources. This research needs to be
done, not only for product, but for the broker also that you choose for
managing the investment. Try to invest in diversified portfolios.
3) Consider the fees – On selling your
stocks, the yield may look impressive, but when you start deducting the various
fees and commissions, the sum in your hand may not give you the same
excitement. Therefore, always consider the associated fees with the investments
before doing any online trading.
Along
with these considerations, there are also some Don’ts that one must follow for
online trading.
1) Keep your password a secret - Don’t let anybody else access or handle your demat
account. Your password and security pin
must not be shared with others.
2) Don’t use a public computer - No matter how important it is, never use a
common computer for accessing your account, as there may be a risk of getting
it hacked.
3) Don’t invest with emotions – Do not invest blindly in any stock just because
your online broker is suggesting it or its prices are suddenly rising. Many a
times we see such stocks fall badly after the unnatural rise.
Last but not the least,
thorough research and patience are the two main pillars while doing online
trading.
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