What is online trading ?

You may hear more and more about online trading, which is correct, because many people decide to start trading to try to increase their income, or even make it their career!

Online Trading

Trading definition: Online trading is simply buying and selling financial securities via an online trading platform or mobile trading application. These online trading programs are made available to traders, usually free of charge, by internet brokers. They are available to anyone who wants to invest in the stock market and trade financial instruments on the markets.

The activity of online trading consists of speculating on the financial markets, trying to take advantage of price variations of assets to earn money between the time of purchase and resale, or vice versa, as it is possible to sell a product that you do not own.

Online trading is a serious activity and should be understood as a profession, not a way to make big money quickly without risk and knowing nothing about it. In addition, indeed, all people who are prepared to work hard and participate 100% in this activity can conduct online transactions, and psychology is a daily challenge.

Origin of Online Trading

Online trading has grown considerably since 1990 due to technological advances in high-speed computers, affordable prices, and Internet connections:

- Internet: the growth of the Internet is staggering due to its accessibility, as evidenced by global statistics. People now use the Internet to trade and invest.

- Computers: Moore's Law indicates that the overall processing power of computers will double every two years, allowing the trader to quickly connect to the Internet and do their analysis on their computer.

These two trends have spurred rapid growth in online trading and democratized access to the financial markets like never before.

More and more people are now able to trade online and this trend seems to be growing exponentially. Especially since more than 1.7 billion people with cell phones are still excluded from the financial system, but not for long!

What is CFD Trading

CFD trading is the buying and selling of one or more CFD products.

To better understand CFDs in the stock market and their importance to the individual trader, we will list the characteristics of a CFD.

First of all, "CFD" comes from the English word "Contract For Difference", which means "Contract for Difference". It is the derivative product that can be applied to almost any financial product such as

- Stock market indices

- Forex

- Commodities

Explained most simply, the CFD makes it possible to speculate on the rise or fall in the value of a currency pair, an index, or even gold.

This type of online trading has become very popular as CFD trading allows for speculation on the rise and fall of many financial products such as stocks, commodities, or stock indices and above all with little capital!

What is Forex Trading

When we talk about the Forex market we are talking about the foreign exchange market or currency market. The currency market simply represents the respective values of currencies to each other.

Foreign exchange trading is the activity of investing and speculating on currency pairs, such as :

✴️ Euro Dollar EUR USD

✴️ Pound Sterling Dollar GBP USD

✴️ Dollar Japanese Yen USD JPY

✴️ Euro Japanese Yen EUR JPY

Forex trading is very popular.

This can be explained simply in terms of its advantages:

✅ High Forex liquidity with large volumes in the currency market

✅ Real-time Forex quoting (24 hours a day, 5 days a week)

So it's a market that's open day and night, allowing Forex traders in every corner of the world to trade the Forex rates of their choice. The Euro and the US Dollar both top the list of most traded currencies!

The foreign exchange market has low fees, making it very accessible for a novice trader and several features such as leverage, spread, and CFD contract size.

What is a trader?

The profile of the typical trader can be defined under three distinct:

1️⃣ The analyst, the trader analyzes the context in which a particular instrument is found, using both fundamental and technical analysis, although it is common to see particular traders using only one of these two analyses.

2️⃣ The actual trader, who buys and sells instruments such as CFDs to make gains, based on the difference between the buying and selling price of trading positions.

3️⃣ The risk manager since the trader must above all manage the risk he takes on the markets to remain profitable and continue his activity.

You have understood it a trader must be able to wear several hats to carry out his online trading activity in the best conditions, but a trader is above all a professional of the financial markets, knowing how it works and how to interpret and read the price fluctuations visible on the trading charts to profit from them.