Online Trading

What is online trading? How does it work in 2022? Online trading is an investment activity in the financial markets that takes place through the use of online brokers. On online brokers you can invest in different types of financial instruments: stocks, ETFs, currencies, commodities, etc.. Online trading is open to everyone: you do not need large amounts of capital, since most online brokers have very low minimum deposits, from 50 to 250 euros, and the necessary knowledge can be learned in a simple way.

To trade online you must use the services of an intermediary (called a trading platform or broker). The choice of this intermediary is one of the main obstacles for beginners who want to trade: a mistake can cost you dearly. Forex-CFD-Broker.xyz is the result of the experience of a group of professional traders who have been working in the financial markets for more than 20 years. Our goal is to explain, in simple words, what online trading is and how you can start from scratch in 2022.

Because the choice of trading platform is such an important part of a trader’s career, we carefully review some of the best ones including eToro, XTB, Interactive Brokers, etc. Why do we mention eToro right away? Because it is a suitable platform for beginners given the ease of use and low commissions. On the broker you can either invest independently in stocks, fractional shares, ETFs, CFDs and cryptocurrencies, or copy the best traders automatically through Copy Trading.

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What is online trading and how it works

Online trading refers to an investment activity in the financial markets that takes place through the use of online brokers. The objective of those who invest online is to maximize their wealth over time rather than leaving their savings “to die” in the current account. Online investing, from the point of view of fees, is much more convenient than investing through a bank or SIM.

After studying and practicing on the demo account of the chosen broker, you can start investing in various financial instruments. The most purchased financial instruments in the world are undoubtedly stocks but ideally you should have a diversified portfolio containing different types of assets. When a user places an order to buy a stock on an online trading platform, their order is saved in the database of the trading platform and the Exchange platform. This data is then used to search all the trading platforms for that particular stock and display the result with the best available price. If the price matches the user’s requirements and he confirms the order, the process is validated by both parties.

After this is completed, the broker usually has three days to complete the settlement of the money that will be transferred to the user’s account. There are also a number of tools on online brokers to assess how good a stock is and to stay up-to-date on the latest news. Today’s online platforms attract users because of their ease of use and low commissions.

Where to trade online

We mentioned in the introduction that the trading platform (called a broker) is fundamental to trading the markets.

Without the support of an online trading platform you cannot trade. The broker is in charge of managing the trader’s account and executing buy or sell orders.

Basically, to trade online you need to:

  1. Select a good trading platform: it costs money to make a mistake here
  2. Register by entering the few data required
  3. Verify your identity: it takes a few minutes and it is a step required by European legislation
  4. Make your first deposit (optional)

Let’s say that making the first deposit is optional because all the best online trading platforms offer the possibility to start with a demo, i.e. with a simulation where you invest virtual money.

Characteristics of a trading platform

How do you choose the trading platform? We have already pointed out that it is a really important, fundamental choice.

A good trading platform must be:

  1. Secure. Unfortunately, in the world of trading there are also scams and you need to be careful. The only insurance against scams is to work only with authorized and regulated trading platforms.
  2. Affordable. Paying fixed commissions on operations is a real financial suicide.
  3. Easy to use. For a beginner, encountering technical difficulties at the beginning is an insurmountable problem. Fortunately, there are trading platforms that are truly intuitive and therefore suitable for those who start from scratch.

Remember: online trading is free, safe and intuitive, as long as you use the best trading platform.