The 3 Most Popular Forms Of Online Trading

In the last decade, we have seen an explosion in the number of ways to trade online, it is an easy way for people at home to use the internet to its full potential, doing some that previously you would have needed to speak with a trader over the phone to do (whilst paying a much larger level of commission).

Of course, the other side of this is that it can get people into financial difficulty as anybody with any level of trading experience can invest thousands of pounds, which perhaps they can’t afford to lose.

This has been the issue with online gambling including roulette machines, blackjack, and sports betting, it is worth noting that trading online is effectively a form of gambling, the bookies might not be setting the pay-outs and the odds, but you still have just as much chance of losing your money so only ever invest money you can afford to lose.

We’re going to have a look at some of the most popular forms of online trading at the moment.

1. Forex

This has been around for quite a several years now and now has a reputation as a “get rich quick” scheme thanks to the number of websites and social media stars who have promoted their “method” of beating the system and earning hundreds of thousands of pounds per month, as with everything, you can make money from it you just need to research, research, and do yet more research.

Forex is a combination of ‘foreign’ and ‘exchange’ and is a platform that enables you to trade currencies online. Let’s say you saw something in the news that made you think that the dollar was about to get weaker, it could be inflation, oil prices, or anything that could affect a country’s currency. Forex enables you to buy the currency at a certain price and effectively bet on whether it is going to go up or down, if you bet on it to go down and it does then you will make money out of it, if you bet on it to go down and it goes up you lose money on it. It is a very basic way of trading but in-depth knowledge of a countries situation and finances to be accurate.

At a basic level, the easiest way to introduce yourself to it is to wait until a currency is at some kind of historic low and then bet on it to go back up again. The popularity of Forex has certainly waned in recent years with the explosion of cryptocurrency.

2. Cryptocurrency

This took over from Forex as one of the most popular forms of online trading but is very similar even if the thing being traded is different. Currency is being traded on both; the only difference is that one is cryptocurrency. If anything, trading cryptocurrency is actually a bigger risk than trading on Forex as cryptocurrencies aren’t actually tied to anything tangible in the same way that a country’s currency is. The price of Bitcoin for example is determined purely by demand, if all of a sudden lots of people start selling it all at once (as we have seen recently with Bitcoin and Ether) the price absolutely plummets, potentially losing people a lot of money even though there wasn’t necessarily any reason for it, it is more just consumer confidence that determines it.

The top traders develop their own 3^rd party software using something like Java to alert as soon as a price drop occurs so that the currency can be sold off quickly before it falls any more, that way they protect their money.

3. Shares & Commodities

This is something that you used to need a real person to trade for you, but the internet made it far more accessible for your everyday person. Companies like IG offer you the chance to trade on any major stock exchange around the world from the FTSE100 to the NASDAQ. Somebody at home in England could be buying shares from the US stock exchange at 3 am if they wished.

A person can connect their UK bank account and fund their trading account, find shares in any company, and buy them within a few seconds. There are great levels of information available to investors to inform their decision which is good (and very different to Forex or Crypto) as you can view all a company’s press releases and financials as well as if they are a popular choice to buy with other investors.

Closing Thoughts

These are some of the most popular forms of online trading but always remember to be careful when trading online, only ever use reputable, well-known websites with a big footprint online, and don’t be attracted by commission levels that are too good to be true or you could end up being a victim of fraud. If you do ever find yourself in that situation, then ensure you hire investment fraud lawyers like Wealth Recovery Solicitors as they may be able to get your money back for you. Unfortunately, if you lose your money fair and square through bad trading then there is nothing that can be done.