How does trading on the stock market work?
While it was once necessary to go through a specialized broker or an investment product, it is now possible to invest in the stock market directly online by a practice called "trading". Thanks to the big technological developments of the internet in recent decades, some brokers have developed trading platforms which allow private investors to speculate on the price of most French, European and international stock market shares without having to go through an intermediary and without having to buy the titles directly.
To start investing in the stock market online, you just have to create an account in one of these brokers and deposit a capital investment that will be used to take different positions. Everything is then done directly from the trading platform available to the users.
Online trading works with contracts for difference, also known as CFDs, which allow you to invest any amount of money on one or more securities, regardless of the actual price of the stock. Of course, CFDs, allow both buying and selling positions, which corresponds to a short selling method. Depending on whether you anticipate a rise or fall in the price of the stock or index that interests you, you can trade in the direction of the trend that interests you.
The calculation of your losses or gains is then made by the difference between the price of your asset at the moment of your position and its price at the close of it.
Of course, stock trading platforms not only allow you to access the market but also provide you with functional features and tools to help you carry out your analysis and set up your strategies, which we will describe in detail below.
An online investment that requires good knowledge of the stock market:
Of course, and even if trading platforms are aimed to everybody who wish to invest in the stock market independently, they are not recommended for beginners or people who do not know anything about how the stock market works. Indeed, to take wise positions on the assets that interest you, it is necessary to be able to anticipate the future changes in the price of these assets and know how to manage the eventual potential risk of loss.
If you are just starting to get interested in the stock market, we advise you to take the time to train and speculate before you start investing your capital online. In order to do this, you can browse our site where you will find many informative and explanatory articles about the stock market, its operation, the various major stock market indices and shares of the latter, as well as explanations about the different strategies and methods of analysis.
As with any other activity, online trading requires good training and should not be done lightly, simply by speculating at random.
We draw your attention to the absolute need of being familiarized with the stocks and other assets which you plan to trade before taking your positions. To help you, we invite you to discover on our website a lot of information about the largest stock markets in the world. For each asset, we will provide you with explanations about the company, its activities, its competitiveness or its partners and some tips to help you perform fundamental and technical analysis of good quality.
Advantages and disadvantages of investing in the stock market:
As we have just mentioned, investing in the stock market is now more accessible than ever before and everyone can, if they wish, speculate on the major stock markets around the world. But this type of investment has advantages and disadvantages, which we invite you to discover in more detail here in order to become aware of the possibilities and the risks associated with it.
First of all, it is obvious that investing in the stock market has undeniable advantages for individuals who have enough capital and want to create even more out of it.
Firstly, investing on values on the stock market allows, when the strategies put in place are consistent and effective, to obtain a better result than most savings products offered by banks.
It should also be pointed that, compared to other kinds of assets, stock assets can be analyzed more easily. In fact, you will easily find the financial and economic information about the top-ranking companies online and will also be able to follow market events that may have an influence on the price of their shares by simply subscribing to a news feed or by consulting the news provided by your broker.
You will also be able to trade like a professional by using the analysis features that are available on the stock market charts and which will allow you to display the main trends indicators and volatility indicators in just a few clicks, which will facilitate your historical or real time technical analysis.
But of course, and before choosing to invest on the stock market, you should also know the disadvantages of this kind of trading.
First of all, you need to choose the value well because some values in the stock market are less volatiles than others, which makes the detection of trends more complex and positions taking less profitable.
On the other hand, you must probably know that when you invest in the stock market, there is nothing to protect your capital. The risks of loss are therefore very real, and you should take it into account by adopting a good money management in order to minimize their impact and avoid losing all of your capital
In conclusion and even if trading on the stock market have many advantages, it is a practice mainly reserved to investors who are familiarized with the market and who are able to devote enough time to carry out relevant analysis.
What are the features offered by online trading platforms?
If you are passionate enough about the stock market to invest online on the assets and indices around the world, the fact of using an online trading platform assures you optimal investment comfort. In fact, those platforms are highly technological nowadays and offer several practical tools and features which we invite you to discover more in detail here.
First of all, trading platforms allow you to manage the positions you take directly and in real time through the different kinds of displays such as real time graphical display. Most of them allow you to personalize the display of your positions and calculate your losses and gains in real time.
From an analysis point of view, trading platforms also put at your disposal innovating stock market graphs which you can also personalize by choosing the type of display that you prefer, the period and the main technical indicators. They also offer clear reading and facilitate the interpretation of different configurations. The same goes for the fundamental analysis since most of the brokers provide the users of their platforms with news of the market in real time. Here again, it is possible to personalize the alerts received according to the stock market actives that you follow or that you are interested on.
As far as the positions are concerned, they are also easier to manage. In fact, trading platforms allow you to place orders in order to execute the opening or closure of your positions at any time depending on different elements. For example, you can schedule to open or close a position at a given course to take advantage of an upcoming trend, and to reduce your losses or recover your gains. You do not need to stay connected to the market to keep track of the evolution of your assets constantly and you can manage risk better.
If you want to try a trading platform or a strategy before embarking in real mode with your own money, many brokers offer demo training accounts which allow you to invest virtually in real market conditions.
Finally, the most advanced trading platforms offer other interesting features such as social trading modules which allow you to follow and sometimes even copy the performance of other traders, automatic trading modules or managed accounts.
Choosing the right broker and the right online trading platform:
As we have just seen in detail, investing on the stock market online, through trading has many advantages. But you still must be able to choose the right online broker out from a constantly increasing number every day.
In order to be sure that you are making the right choice, you should pay attention to the different important criteria. Ask yourself if the trading platforms available are adapted to your needs or your experience. We know by fact that some trading platforms are easier to use than others that are more complex and more sophisticated which are addresses mainly to investors who have are successful with this kind of investment online.
Of course, you also have to be sure that the broker you open your account with is a regulated broker. In fact, only brokers that have been approved by the European or French financial authority are considered reliable regarding the security of transactions. Do not forget that you will invest your money on these platforms and that you should therefore make sure that it will be safe and that your personal data will also be protected.
You can also make sure that the broker that you chose has an easily joinable and responsive customer and technical service that will help you whenever you need and in your native language.
In order to help you take this difficult choice, on our website we offer you a precise and detailed comparison of the most qualitative brokers on the market with detailed information about each broker and its main characteristics, its prices (spreads), its assets or its features. Of course, all the brokers presented on our site benefit from an official approval.
Some additional advice to invest successfully on the stock market online:
If you are thinking about embarking in stock market speculation online, here are some simple advice that could be useful and help you manage your investments better.
First of all, take the time to think carefully about some important questions, especially regarding the amount of capital you should invest online, the broker you chose or the assets you chose to trade.
You should also take the time to familiarize yourself with your trading platform by discovering all its features and why not by giving it a try with a demo account. You will be more comfortable once you take your real positions and will not waste time because of misunderstanding or mishandling.
Never invest all of your capital in a single value and limit the use of leverage because it can lead to large and rapid losses. Adopt strict money management and set limits that you should never exceed.
Finally, remember that an effective strategy is mainly a strategy based on consistent and relevant analysis. Therefore, you should take the time to carry out good technical and fundamental analysis before taking any decision and never take a position at random or just by following your instinct.