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Unit 1 - preschool

Forex basics

Currency trading? Forex trading? FX trading? Totally clueless about forex? Here’s an introduction to the foreign exchange market.

For those of you who are complete newbies to forex trading and are trying to learn the ropes, it can often be an overwhelming and daunting world, but it doesn’t have to be. This unit will bring you up to speed with everything forex!

Understanding the market

When making any investment it is important to gain some understanding in what you’re getting into. This will allow you to achieve the best results possible and limits the amount of mistakes you make.

If you want to actually learn how to trade forex, you’ll need a basic understanding on how forex trading works to begin with. After this unit you will know exactly how the market works.

How to start trading forex (4 steps)

Welcome to the world of forex. There might be many reasons why you are reading this article. It could be that your friend or acquaintance mentioned about how they trade and perhaps even make a living by trading forex. Whatever your reasons may be; this article will give you an overview of the forex markets and how to start trading forex … and perhaps make money for yourself.

Step 1. What is forex?

Step 2. Learn forex basics

Step 3: find a forex broker

Step 4: start trading

Step 1. What is forex?

Forex, or foreign exchange is an unregulated market, also known as OTC (over-the-counter) and is the biggest market with average daily turn-over that runs into billions. It is even bigger than the US stock markets. Although due to its OTC nature, no one can really give the correct numbers as to the forex turnover. But nonetheless, forex is indeed a big market and thus allows many market participants. From your neighborhood bank to specialized investment companies, to your friend; the forex markets always offers a piece of the action whoever you are and wherever you are (even from your home).

The basic concept of trading forex is very simple. You trade or speculate against other traders on the direction of a currency.

So, if you believe that the euro is going to rise, you would BUY the euro, or SELL the euro if you think the euro would fall. It’s as simple as that.

Step 2. Learn forex basics

Before you get ready to deposit your funds and start trading there are some important points you must understand, each of which are outlined below.

Forex brokers: in order to start trading forex, you will need to trade with the help of a forex broker. There are many forex brokers out there today who allow you to open a forex trading account for as little as $5. The forex broker is the one who facilitates your buy and sell orders and also allows you to research into the markets (also known as technical or fundamental analysis) to help you make more informed decisions… and of course allows you deposit more funds or withdraw your profits when you want to. ( click here to see our forex brokers rating )

Trading platform:you need a trading platform from which you can place your trades, which are then sent to the broker for settlement. Also, a trading platform is essential for you to conduct your technical analysis and also to see the current market prices. Most retail brokers offer the MT4 (short for metatrader 4) trading platform, which is free of cost. You can also open a demo trading account and practice trading with virtual money to gain the experience required before trading with real money.

Forex trading hours:while you might have heard that the forex markets never sleeps, it actually does. Firstly, you won’t be able to trade on weekends (saturday and sundays). But for the rest of the week, the forex market operates 24 hours a day. This is due to the fact that forex trading is global. At any point in time, you will always find an overlap of a new market session while the previous market closes. What time of the day or which market session you trade plays a big role if you are an intra-day trader or a scalper. This is another vast topic, which we will cover at a later stage. ( click here to learn more about forex trading hours . )

Now that you have a basic overview of the forex markets, here are some final pointers to remember before you start trading for yourself.

What is a pip?:pip is a measure of change in a currency pair’s value and is the 5 th decimal. For example, if EURUSD changes from 1.31428 to 1.31429, the change is denoted as 1pip (1.31428 – 1.31429 = 0.00001). When you trade, the more pips you make, the more profit you have. Ex: buying EURUSD at 1.31428 and selling (or closing your trade) at 1.31528 would give you 100pips in profit. ( read more about forex PIP )

Reading quotes: forex quotes are presented in a bid and ask price (both of which vary by a few pips and from one broker to another). The bid price is the price at which you can buy and the ask price is the price as which you can sell. So, a EURUSD quote would look like this 1.31428(bid)/1.31420(ask).

What is a spread?: spread is nothing but the difference between the bid and ask price. So in the above example, for 1.31428/1.31420, the spread would be 8 pips. ( read more about forex spread)

What is a leverage?: leverage is the amount by which you can request your broker to magnify (or increase) your trade value. Leverage is often quoted in ratios such as 1:50, which means that when trading on a 1:50 leverage, your $100 is magnified to $50000. Leverage is a big topic in itself and it is recommended to read this article to learn more. Leverage is important both in terms of making profits as well as managing risks and therefore, your trades.

What is a lot?: A lot is a unit by which you place your trade. In financial terms, a lot is also referred to as a contract. There are preset lots (or contract sizes) that you can trade. For example a standard lot is nothing but 100,000 units (known as 1 lot). ( read more about lot)

Reading charts: the ability to understand and read the charts is very essential to trading. Depending on your approach, you can choose between a line, bar or candlestick charts and trade accordingly (for example trading based on candlestick patterns). ( read more how to read forex charts)

Placing orders (how to buy and sell): in forex trading, it is possible to either buy or sell any currency pair. Most trading platforms, give you this option. You buy when you think that price will go up and you sell when you think that price will fall. There is a common terminology used in forex trading, which is buy low, sell high; which is an important point to remember. ( read more how to place orders with MT4 )

Order types: besides buy and sell, another point to remember the types of orders. There are two basic order types: market orders and pending orders. When you click on ‘buy’ or ‘sell’ you are basically buying (or selling) at the current market price. A limit order on the other hand tells the broker that you want to buy or sell only at a particular price. ( read more about types of forex orders)

Step 3. Find a forex broker

As mentioned, there are many forex brokers today and therefore it can get confusing on how to choose the forex broker that is right for you. To briefly summarize, remember the following points while choosing a forex broker:

Look for a forex broker that is regulated

See if the forex broker offers a minimum deposit amount

What is the leverage that the broker offers

What is the minimum contract size that you can trade

Bonuses and the terms and conditions (see on our site list of forex deposit bonuses and forex no deposit bonuses)

Deposit and withdrawal types as well as the terms and conditions

Trading methods that are allowed by the broker

We can also help you choose a forex broker by reading our article how to choose forex broker

Step 4. Start trading

Finally, now that you have selected a forex broker to trade with it is recommended to first open a demo trading or a practice account. Most forex brokers offer unlimited demo trading account (but will be deactivated if not used for 30 days). This is a good way to get acquainted with the forex markets and also help you to understand your trading style (scalper or intra day trading, swing trading, etc) and approach (fundamental or technical analysis). You can search for various trading methods and systems or you can develop one yourself when you have a good understanding of technical or fundamental indicators.

Conclusion:

Forex trading is one of the most active and dynamic ways to trade the financial markets. At the heart of everything, it is the basic fluctuations in currency values which drives everything else. Learning to trade forex and understanding the forex markets can give a good foundation to trading other markets such as derivatives or equities.

How to start investing in stocks: A beginner's guide

Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending. Legendary investor warren buffett defines investing as "…the process of laying out money now to receive more money in the future." the goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

Let's say that you have $1,000 set aside, and you're ready to enter the world of investing. Or maybe you only have $10 extra a week, and you'd like to get into investing. In this article, we'll walk you through getting started as an investor and show you how to maximize your returns while minimizing your costs.

Key takeaways

Investing is defined as the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Unlike consuming, investing earmarks money for the future, hoping that it will grow over time.

Investing, however, also comes with the risk for losses.

Investing in the stock market is the most common way for beginners to gain investment experience.

What kind of investor are you?

Before you commit your money, you need to answer the question, what kind of investor am I? When opening a brokerage account, an online broker like charles schwab or fidelity will ask you about your investment goals and how much risk you're willing to take on.

Some investors want to take an active hand in managing their money's growth, and some prefer to "set it and forget it." more "traditional" online brokers, like the two mentioned above, allow you to invest in stocks, bonds, exchange traded funds (etfs), index funds, and mutual funds.

Online brokers

Brokers are either full-service or discount. Full-service brokers, as the name implies, give the full range of traditional brokerage services, including financial advice for retirement, healthcare, and everything related to money. They usually only deal with higher-net-worth clients, and they can charge substantial fees, including a percent of your transactions, a percent of your assets they manage, and sometimes a yearly membership fee. It's common to see minimum account sizes of $25,000 and up at full-service brokerages. Still, traditional brokers justify their high fees by giving advice detailed to your needs.

Discount brokers used to be the exception, but now they're the norm. Discount online brokers give you tools to select and place your own transactions, and many of them also offer a set-it-and-forget-it robo-advisory service too. As the space of financial services has progressed in the 21st century, online brokers have added more features, including educational materials on their sites and mobile apps.

In addition, although there are a number of discount brokers with no (or very low) minimum deposit restrictions, you may be faced with other restrictions, and certain fees are charged to accounts that don't have a minimum deposit. This is something an investor should take into account if they want to invest in stocks.

Robo-advisors

After the 2008 financial crisis, a new breed of investment advisor was born: the robo-advisor. Jon stein and eli broverman of betterment are often credited as the first in the space. their mission was to use technology to lower costs for investors and streamline investment advice.

Since betterment launched, other robo-first companies have been founded, and even established online brokers like charles schwab have added robo-like advisory services. According to a report by charles schwab, 58% of americans say they will use some sort of robo-advice by 2025. if you want an algorithm to make investment decisions for you, including tax-loss harvesting and rebalancing, a robo-advisor may be for you. And as the success of index investing has shown, if your goal is long-term wealth building, you might do better with a robo-advisor.

Investing through your employer

If you’re on a tight budget, try to invest just 1% of your salary into the retirement plan available to you at work. The truth is, you probably won't even miss a contribution that small.

Work-based retirement plans deduct your contributions from your paycheck before taxes are calculated, which will make the contribution even less painful. Once you're comfortable with a 1% contribution, maybe you can increase it as you get annual raises. You won't likely miss the additional contributions. If you have a 401(k) retirement account at work, you may already be investing in your future with allocations to mutual funds and even your own company's stock.

Minimums to open an account

Many financial institutions have minimum deposit requirements. In other words, they won't accept your account application unless you deposit a certain amount of money. Some firms won't even allow you to open an account with a sum as small as $1,000.

It pays to shop around some and to check out our broker reviews before deciding on where you want to open an account. We list minimum deposits at the top of each review. Some firms do not require minimum deposits. Others may often lower costs, like trading fees and account management fees, if you have a balance above a certain threshold. Still, others may give a certain number of commission-free trades for opening an account.

Commissions and fees

As economists like to say, there's no free lunch. Though recently many brokers have been racing to lower or eliminate commissions on trades, and etfs offer index investing to everyone who can trade with a bare-bones brokerage account, all brokers have to make money from their customers one way or another.

In most cases, your broker will charge a commission every time that you trade stock, either through buying or selling. Trading fees range from the low end of $2 per trade but can be as high as $10 for some discount brokers. Some brokers charge no trade commissions at all, but they make up for it in other ways. There are no charitable organizations running brokerage services.

Depending on how often you trade, these fees can add up and affect your profitability. Investing in stocks can be very costly if you hop into and out of positions frequently, especially with a small amount of money available to invest.

Remember, a trade is an order to purchase or sell shares in one company. If you want to purchase five different stocks at the same time, this is seen as five separate trades, and you will be charged for each one.

Now, imagine that you decide to buy the stocks of those five companies with your $1,000. To do this, you will incur $50 in trading costs—assuming the fee is $10—which is equivalent to 5% of your $1,000. If you were to fully invest the $1,000, your account would be reduced to $950 after trading costs. This represents a 5% loss before your investments even have a chance to earn.

Should you sell these five stocks, you would once again incur the costs of the trades, which would be another $50. To make the round trip (buying and selling) on these five stocks would cost you $100, or 10% of your initial deposit amount of $1,000. If your investments do not earn enough to cover this, you have lost money by just entering and exiting positions.

If you plan to trade frequently, check out our list of brokers for cost-conscious traders.

Mutual fund loads (fees)

Besides the trading fee to purchase a mutual fund, there are other cost associated with this type of investment. Mutual funds are professionally managed pools of investor funds that invest in a focused manner, such as large-cap U.S. Stocks.

There are many fees an investor will incur when investing in mutual funds. One of the most important fees to consider is the management expense ratio (MER), which is charged by the management team each year, based on the number of assets in the fund. The MER ranges from 0.05% to 0.7% annually and varies depending on the type of fund. But the higher the MER, the more it impacts the fund's overall returns.

You may see a number of sales charges called loads when you buy mutual funds. Some are front-end loads, but you will also see no-load and back-end load funds. Be sure you understand whether a fund you are considering carries a sales load prior to buying it. Check out your broker's list of no-load funds and no-transaction-fee funds if you want to avoid these extra charges.

In terms of the beginning investor, the mutual fund fees are actually an advantage relative to the commissions on stocks. The reason for this is that the fees are the same, regardless of the amount you invest. Therefore, as long as you meet the minimum requirement to open an account, you can invest as little as $50 or $100 per month in a mutual fund. The term for this is called dollar cost averaging (DCA), and it can be a great way to start investing.

Diversify and reduce risks

Diversification is considered to be the only free lunch in investing. In a nutshell, by investing in a range of assets, you reduce the risk of one investment's performance severely hurting the return of your overall investment. You could think of it as financial jargon for "don't put all of your eggs in one basket."

In terms of diversification, the greatest amount of difficulty in doing this will come from investments in stocks. As mentioned earlier, the costs of investing in a large number of stocks could be detrimental to the portfolio. With a $1,000 deposit, it is nearly impossible to have a well-diversified portfolio, so be aware that you may need to invest in one or two companies (at the most) to begin with. This will increase your risk.

This is where the major benefit of mutual funds or exchange-traded funds (etfs) come into focus. Both types of securities tend to have a large number of stocks and other investments within the fund, which makes them more diversified than a single stock.

The bottom line

It is possible to invest if you are just starting out with a small amount of money. It's more complicated than just selecting the right investment (a feat that is difficult enough in itself) and you have to be aware of the restrictions that you face as a new investor.

You'll have to do your homework to find the minimum deposit requirements and then compare the commissions to other brokers. Chances are you won't be able to cost-effectively buy individual stocks and still be diversified with a small amount of money. You will also need to make a choice on which broker you would like to open an account with.

Carscoops

FCA and PSA merger now official, stellantis to start trading on stock markets

As of this morning, january 16, the long-awaited stellantis merger between peugeot S.A. (PSA group) and fiat chrysler automobiles N.V. (FCA) is official, effective immediately.

Stellantis’ common shares will begin trading on the paris and milan stock exchanges starting next monday, january 18, and on the new york exchange on tuesday, january 19.

Also on tuesday, carlos tavares will hold the new group’s first press conference as stellantis chief executive officer, laying out the vision for the newly-formed automaker. The challenges ahead are many, and they mainly deal with electrification, the COVID-19 pandemic, and attracting new buyers.

However, this merger probably won’t come without its repercussions. Stellantis will start its life with seven FCA brands and another four from PSA, and as such, they may be stretching themselves out a little thin. Almost every merger results in duplication and can cause the demise of some products or even brands, and it could happen in this case as well.

Interestingly enough, the brands that seem the most likely to go are allegedly chrysler and dodge. Both have suffered from sub-par sales, and are both paring back their lineups. Chrysler only has the pacifica and voyager minivans and the aging 300 sedan, and dodge is left with just the durango, charger and challenger, all of which also ride on old platforms.

Then there are the italian brands, fiat, alfa romeo and maserati, who have also fell short of sales expectations in north america. Fiat’s dismal sales, for example, resulted in the discontinuation of the 500, 500L and 124 spyder, leaving only the 500X sold in the U.S.

The real powerhouses on FCA’s side are jeep and ram, and it seems likely that they’re the reason the merger was considered in the first place. Jeep will only grow in magnitude with greater international presence, and while ram is likely to remain mostly centered on the north american market, there is now the possibility to increase its market reach, especially with commercial vehicles.

The PSA group brings with it peugeot, citroen, DS automobiles and opel, which the group bought from GM in 2017. Before the creation of stellantis, there were some talks of possibly bringing a PSA group brand to the U.S. By the middle of the decade, and that brand was later identified as peugeot.

Apparently, a small group of executives have been in place in the states to oversee the return of the brand that left in 1991. Peugeot CEO jean-philippe imparato now says plans to re-enter the US by 2026 may be reconsidered, according to an automotive news europe report.

What do you think? Would you like to see peugeot return if it meant the end of chrysler and/or dodge? Let us know in the comments.

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If you have more questions, then feel free to browse the site or fill out the below form and someone will make contact with you shortly

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What is forex trading?

Forex trading is essentially the trading of foreign exchange. That is where the word comes from. Now we don't mean how our grandparents would have traded currency, or even how many people still trade by going to the bank or other exchanges and paying huge fees to buy foreign currency. Today, we trade from our mobile devices or computers from the comfort of our homes or wherever you are.

Why trade?

It's not just about the money. Don't get me wrong, the money is great. But taking control of your own time so you don't have to sit in an office and watch a clock all day is priceless!

It's about securing not only your future, but also your time now. If you are fine with sitting in traffic for an hour each day, having a job that you don't enjoy, being too tired on weekends to go out and have fun then good for you. Trading is for people who want more out of life.

How is money made trading forex?

In the simplest terms, we make predictions and we spend money based on those predictions. There are many tools traders use to make these predictions, from analyzing charts to following major news events.

As an example. Imagine you were reading that england will take a hammering due to some major news coming out (example, brexit). But then you read that australia is getting a lot of interest from international investors and their currency is going to get stronger. So we say that the GBP is getting weaker and AUD is getting stronger. So we sell GBP and buy AUD.

Once we see that the movement has happened we close our trade and cash in! It is a bit more complicated than that, but you will learn about it all in our free online training.

I want to start buying stocks—but where do I start?

Discover the different types of stock broker-dealer relationships

In order to buy stocks, you need the assistance of a stockbroker who is licensed to purchase securities on your behalf. However, before you make a decision on a stockbroker, you need to figure out what type of stockbroker is right for you.

There are four basic categories of stockbrokers available today, ranging from cheap, simple order-takers to the more expensive brokers who provide full-service, in-depth financial analysis, advice, and recommendations: online/discount brokers, discount brokers with assistance, full-service brokers or money managers.

Key takeaways

It has never been easier for ordinary individuals to start investing and trading stocks.

Several online brokers now allow you to open an account with low opening balances and low fees, and since 2019 many brokers also offer $0 commissions on stock trades.

Before you start trading on your own, you may also want to try out some strategies using a simulated or demo account first.

I want to start buying stocks: where do I start?

Online/discount brokers

Online/discount brokers are basically just order-takers and provide the least expensive way to start investing since there is typically no office to visit and no certified financial planners or advisors to assist you. The only interaction with an online broker is over the phone or via the internet. Cost is usually based on a per-transaction or per-share basis, allowing you to open an account with relatively little money. An account with an online broker allows you to buy and sell stocks/options instantly with just a few clicks.

Since these types of brokers provide absolutely no investment advice, stock tips or any type of investment recommendations, you're on your own. You'll get technical support for the online trading system. Also online brokers typically offer investment-related website links, research, and resources, but these may be third-party providers. If you feel you are knowledgeable enough to take on the responsibilities of directing your own investments, or if you want to learn how to invest without making a large financial commitment, this is the way to go.

Discount brokers with assistance

Discount brokers with assistance are basically the same as online brokers, with the difference being that they're likely to charge a very small account fee to pay for the extra assistance. This assistance, however, is usually nothing more than just providing a bit more information and resources to help you with your investing.

Discount brokers can be the same companies as your basic online/discount brokers that offer upgradeable accounts or services. However, they stop short of giving you any sort of investment advice or recommendations. For example, they may offer more in-house research and reports or publish investment newsletters with investment tips.

Full-service brokers

Full-service brokers are the traditional stockbrokers who take the time to sit down with you and know you both personally and financially. They look at factors such as marital status, lifestyle, personality, risk tolerance, age (time horizon), income, assets, debts and more.

Full-service brokers then work with you to develop a financial plan best suited to your investment goals and objectives. They can also assist with estate planning, tax advice, retirement planning, budgeting and any other type of financial advice, hence the term "full service." they can help you manage all of your financial needs now and for the rest of your life, if need be.

These types of brokers are for those who want everything in one package. In terms of fees, they are more expensive than discount brokers, but the value in having a professional financial advisor by your side can be well worth the additional costs—accounts usually can be set up with as little as $1,000.

Money managers

Money managers are somewhat like financial advisors but may take full discretion over a client's account (hence the term "manager"). These highly skilled investment professionals usually handle very large portfolios of money, and, thus, charge management fees (that can be quite large) based on the assets under management and not per transaction.

Money managers are basically for those with substantial incomes who would rather pay someone to fully manage their investments while they're doing the jobs that make the money. Minimum account holdings can range from $100,000 to $250,000 or more and may charge upwards of 1% a year of assets under management.

Roboadvisors

Roboadvisors are digital asset managers that cater to those who want to just set-it-and-forget-it. These algorithmic platforms are low-cost, require low minimum balances and will automatically maintain an optimal portfolio for you, typically based on passive index investing strategies. For instance the typical fee for roboadvisors is currently around 0.25% per year of assets under management, and you can start with literally $1 or $5 with several platforms.

Roboadvisors vary in their offerings. Some are completely automated, while others offer access to human assistance as well. Regardless of the model, they all provide customer service to assist you through the process. The robo-advisory has been around for a few years, but it's still growing.

The new entrants into the landscape benefit the consumer by lowering fees while contributing many paths to professional asset management. As with any life choice, the investor should figure out what type of investment guidance he or she needs and select a roboadvisor or financial professional to suit his individual style.

Test strategies before buying real stocks

For those keen to learn what stock trading is all about without spending hundreds or thousands of dollars, you can sign up for a free investopedia simulator account.

The simulator is a simulated online broker account for users, who are given US $100,000 in pretend money, to practice investing strategies or to simply learn how to trade stocks and options in real companies in the stock market. You should also sign up for our free investing basics newsletter to learn more about stock trading.

Once you have determined how stock trading works and what is most important to you in a broker, you can take the next step. Each broker's pricing, features, and platforms are different, so this step can be intimidating. If you have a difficult time choosing a broker, research the best online brokers or best discount brokers.

What do the experts have to say?

Advisor insight

Joe allaria, CFP®
carsonallaria wealth management, glen carbon, IL

You'll have to make a significant investment into learning and monitoring what goes on in the market. Before taking any action, I would recommend learning as much as you can on securities, perhaps by taking investment classes offered through an accredited program. Also, learn as much as you can about different investment philosophies.

Then do a test run: pick some stocks and monitor their daily fluctuations, seeing how they affect your bottom line. If you can't handle the volatility, you need to create a new strategy – or consider hiring an advisor. Working with one, even temporarily, is a way to get a crash education in investing. The key is to gain the knowledge to be able to make informed decisions and never blindly to follow the next stock tip you see.

How to start trading stocks

Whether you want to start trading stocks actively or just want to invest for the long-term, there are things you need to know before starting. Knowing what to expect and what tools you need improves your chances of success. Here's how to start trading stocks.

Get to know the stock market

Before you get started trading stocks, it's important to know how the market works. Here are key terms to know.

Stocks: these are small pieces of a company.

Shares: these are units of stock.

Stock price: the price reflects the value of a company and its outlook, as determined by those trading the stock (traders and investors). Stocks don't have a set price. They continually fluctuate as they're bought and sold.

Exchange: stocks trade on an exchange, which has set hours. Most buying and selling of stocks takes place during these hours, although some trading does occur outside these hours. Trading outside of hours is called pre-market and after-hours trading.

NYSE: the new york stock exchange is the largest stock exchange in the world. Seventy of the biggest corporations in the world are traded on the NYSE along with thousands of other stocks. its hours are 9:30 a.M. To 4:00 p.M. Eastern time.

Nasdaq: the nasdaq is another stock exchange. All its trades are done electronically and its hours are also 9:30 a.M. To 4:00 p.M. Eastern time.

Ticker symbol: these are a one- to five-letter code used to trade a stock. For example, the ticker symbol for amazon is AMZN.

Bid-ask spread: the price to buy a security is the ask price. The price to sell a security is the bid price. The difference between these two is the bid-ask spread. It's a measure of supply and demand for a given stock as well as a measure of liquidity. A tight bid-ask spread indicates that a stock has good liquidity.

Market liquidity: liquidity means that the stock can be bought or sold quickly at a stable price.

Short selling: while many investors buy a stock and sell it later for a profit, it's also possible to sell first, then buy the stock at a lower price. That's called short selling. Investors can sell first by borrowing the stock.

Decide what kind of trader you are

As you consider how to get started in the stock market, you also need to decide what kind of trader you are. Do you see yourself trading every day? Do you want to trade a couple of times per week? Or do you want to buy stocks and hold them for the long-term?

While there's no right or wrong way to trade, there are risks and rewards to different approaches. Common approaches include:

Day trading: day traders buy and sell stocks throughout the day. The securities and exchange commission (SEC) defines pattern day traders as those who execute four or more day trades within five business days. Day traders often use borrowed money, which can lead to debt if the day trading isn't profitable. It has the potential for quick returns.

Swing trading: this is a longer-term approach than day trading. Swing traders take trades that last from a day to several weeks. It offers relatively quick rewards and less potential for loss than day trading, but it's still a labor-intensive approach.

Investing: this is when you buy and hold stocks for the long term, which could be months or even years.

Day trading is a stressful, risky approach to stock trading.

Consider your finances

If you want to day trade stocks in the U.S., you need to maintain a balance of at least $25,000 in your account. if that's not possible, it rules out day trading.

Swing trading doesn't have a minimum capital requirement, but to be able to trade stocks of varying prices as opportunities become available, you may want at least $10,000 committed to the endeavor. This helps keep your account balance from being whittled away by broker commissions and fees, which are what a broker charges for trading.

Investing requires less capital. Since trades are held for a long period of time, commissions aren't as much of a factor. You can buy stocks as soon as you can afford 100 shares (stocks typically trade in blocks of 100) of the stock you're interested in. Some brokers also allow you to buy fractional shares, so you could get started with even less.

Save money on commissions by making one trade instead of multiple trades. For example, instead of buying 100 shares every week, save the money for a month and make one large purchase.

Find a broker and trading platform

A broker facilitates trading between market participants, allowing you to buy stocks from sellers and sell stock to buyers (there is a buyer and seller for every transaction). As a trader you want a broker that is:

Low cost: low commissions and fees

Reliable: can trade when you want with minimal system outages

Honest: won't steal your money or engage in risky behaviors with it

Gives you tools for research: least important, since there are many free tools available online

If you want to day trade, you may want a few more things in a broker.

The broker should execute orders instantly with no intervention on their part. Even a one-second delay is too much.

"trade from chart" capabilities, and/or the ability to rapidly place, adjust, and cancel orders.

There are many brokers, some of which are better for investors and some which are better for day traders or swing traders. Spend time researching the above factors before choosing a broker.

Each broker offers a trading platform. This is the technology that allows you to view stock quotes, see charts, do research, and, most importantly, place orders. Test out various platforms by opening demo accounts with various brokers.

Practice before you start trading

One way to test-drive potential brokers and practice your trading skills is to use a demo or virtual trading account. A virtual trading account simulates trading, but you're not actually spending any money. TD ameritrade and tradestation both offer virtual trading accounts.

While making a profit on a virtual platform doesn't necessarily mean real money profits will come just as easily, it's a valuable tool for learning how trading works and what style fits you the best.

The bottom line

Trading stocks is exciting because it involves risk and reward. Starting to trade is the easy part, though. Be prepared for losses, and don't trade more than you can afford to lose. Over time, you'll learn what works for you, your goals, and your financial situation.

Start trading now

See what the media has to say about etoroвђ™s trading and investing platform

Those with less expertise might like to try a platform called etoro, which allows customers to copy вђњstar tradersвђќ directly, and can make traders of even the least informed of punters.

The best returns occur when investors are plugged into diverse social groups that enable them to collide with information from multiple networks. In the social media world, as in real life, it pays to hover on the edge of cliques вђ“ but not get slavishly sucked into just one.

Internet social networks that let users follow investments the way they track status updates on facebook are attracting record interest, turning top performers into market stars for individual investors.

A recent research we carried out with the massachusetts institute of technology has shown that copy trading, where traders watch the trading activity of other people and make their decisions accordingly, performs significantly better than manual trading.

Etoro is the worldвђ™s leading social trading platform, which offers both investing in stocks and cryptocurrencies, as well as trading CFD with different underlying assets.

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How to start trading stocks

Get to know the stock market

Before you get started trading stocks, it's important to know how the market works. Here are key terms to know.

Stocks: these are small pieces of a company.

Shares: these are units of stock.

Stock price: the price reflects the value of a company and its outlook, as determined by those trading the stock (traders and investors). Stocks don't have a set price. They continually fluctuate as they're bought and sold.

Exchange: stocks trade on an exchange, which has set hours. Most buying and selling of stocks takes place during these hours, although some trading does occur outside these hours. Trading outside of hours is called pre-market and after-hours trading.

NYSE: the new york stock exchange is the largest stock exchange in the world. Seventy of the biggest corporations in the world are traded on the NYSE along with thousands of other stocks. its hours are 9:30 a.M. To 4:00 p.M. Eastern time.

Nasdaq: the nasdaq is another stock exchange. All its trades are done electronically and its hours are also 9:30 a.M. To 4:00 p.M. Eastern time.

Ticker symbol: these are a one- to five-letter code used to trade a stock. For example, the ticker symbol for amazon is AMZN.

Bid-ask spread: the price to buy a security is the ask price. The price to sell a security is the bid price. The difference between these two is the bid-ask spread. It's a measure of supply and demand for a given stock as well as a measure of liquidity. A tight bid-ask spread indicates that a stock has good liquidity.

Market liquidity: liquidity means that the stock can be bought or sold quickly at a stable price.

Short selling: while many investors buy a stock and sell it later for a profit, it's also possible to sell first, then buy the stock at a lower price. That's called short selling. Investors can sell first by borrowing the stock.

Decide what kind of trader you are

While there's no right or wrong way to trade, there are risks and rewards to different approaches. Common approaches include:

Day trading: day traders buy and sell stocks throughout the day. The securities and exchange commission (SEC) defines pattern day traders as those who execute four or more day trades within five business days. Day traders often use borrowed money, which can lead to debt if the day trading isn't profitable. It has the potential for quick returns.

Swing trading: this is a longer-term approach than day trading. Swing traders take trades that last from a day to several weeks. It offers relatively quick rewards and less potential for loss than day trading, but it's still a labor-intensive approach.

Investing: this is when you buy and hold stocks for the long term, which could be months or even years.

Day trading is a stressful, risky approach to stock trading.

Consider your finances

If you want to day trade stocks in the U.S., you need to maintain a balance of at least $25,000 in your account. if that's not possible, it rules out day trading.

Save money on commissions by making one trade instead of multiple trades. For example, instead of buying 100 shares every week, save the money for a month and make one large purchase.

Find a broker and trading platform

Low cost: low commissions and fees

Reliable: can trade when you want with minimal system outages

Honest: won't steal your money or engage in risky behaviors with it

Gives you tools for research: least important, since there are many free tools available online

If you want to day trade, you may want a few more things in a broker.

The broker should execute orders instantly with no intervention on their part. Even a one-second delay is too much.

"trade from chart" capabilities, and/or the ability to rapidly place, adjust, and cancel orders.

There are many brokers, some of which are better for investors and some which are better for day traders or swing traders. Spend time researching the above factors before choosing a broker.

Practice before you start trading

While making a profit on a virtual platform doesn't necessarily mean real money profits will come just as easily, it's a valuable tool for learning how trading works and what style fits you the best.

The bottom line

So, let's see, what we have: want to learn how to start trading? Get a FREE online trading course, in-depth trading articles & a free practice trading account. Sign up & start trading. At start trading now