Online Trading Basics
If you are interested in getting involved in the financial markets, you can usually pick up online trading pretty quickly. You will either download a software platform to your computer or you can access it from the Web. Once you have access to the trading platform, you can look at different charts and place your orders. You usually have the option of trading from the chart or by clicking on the order button.
Technical Analysis
The advancement of online trading has made technical analysis much more popular than it was previously. While old school investors used technical analysis successfully for many years, it was a lot harder to do. You had to physically get out a piece of paper and plot every piece of price data on to the chart individually. This was a long tedious process and it difficult for most investors to participate in this method of technical analysis.
But with the advent of online trading platforms, you can engage in technical analysis much faster than the old-school traders could. You don’t have to worry about plotting the points on a piece of paper. You simply specify the time frame that you want to use for your chart and what security you want to chart. You can also specify what type of chart you want to use, such as a line chart, bar chart or candlestick chart. Instantly, you’ll be able to view the price data in the format that you chose. See Market Club’s Free Trading Course
Technical Indicators
In addition to being able to view the price data in the format you want, you can also add a number of different technical indicators to the chart. The beauty of online trading is that you can see the price information in a whole new way compared to what was available for most traders before.
With most trading software platforms, there are a number of technical indicators built right into the system. For instance, Moving Averages, Cycles, MACD and Bollinger Bands are common indicators that come on most platforms. In addition to the standard indicators that come with most trading platforms, you can also download custom indicators and install them on your platform. Some platforms even allow you to develop your own indicators to use on the platform.
The Role of Technical Analysis
Technical analysis in itself can be very beneficial. However, most successful traders do not completely forget about fundamental analysis when looking at the markets. You have to pay attention to fundamental factors in addition to the technical factors that you identify. Once you figure out a good balance between the fundamental and technical analysis strategies that you employ, you’ll be able to trade much more successfully overall.
Commissions
When trading online, one of the factors that you have to be mindful of is the commissions that you pay. Every broker has a different commission structure. The commission is the amount that you have to pay the broker just to be able to place a trade. This means that the trade has to make at least that much money befor you break even. If you are trading with a full-service broker, you will pay a more for commissions, because of the extra services and advice that you are receiving.
If you trade with the discount broker, you will have to do your own research, but you can typically save quite a bit of money per trade. If you are the type of trader who likes to trade quite frequently, finding a broker with low commissions will save you significant amounts of money. These commissions can really add up, and you need to do your best to find a broker with a commission structure to fit the way you trade.
Execution
Another factor to consider when you are trading online is the execution of the trades that you place. When trading online, it is vitally important to be able to get into and out of the market quickly so you get a “good fill”. These days, financial markets move very quickly and you need to be able to work within it if you want to make money. Because of this, online execution of your orders is the fastest and easiest way to go. Rather than picking up the phone, waiting for a response, talking with someone, verifying your identity, explaining the trade you want to place and confirming you can place a trade with a few clicks of your mouse.
About the Author:
Chris Keenan is a blogger for nj bankruptcy attorney. He writes on a variety of business topics including outsourcing law.
