Stock market trading has always held a certain fascination! Especially for people who dream of getting rich quickly. Because it is entirely possible, although rare, to become financially independent with just a few trades. With the introduction of online trading, such ideas received new impetus. You can trade in real time from home with the appropriate software.

Both huge profits and severe losses are possible, which is why trading is often viewed as speculative. And in fact, in some cases trading turns out to be more of a bet than an investment. However, if you are aware of the risks, you can increase your chances of winning. Trading is therefore a serious business model for experienced stock market participants. Beginners and inexperienced players should exercise caution so as not to lose everything right from the start.

What is online trading?

Online trading only became possible with the spread of the Internet. In simple words, online trading can be defined as real-time trading in various assets such as stocks, commodities or indices. In order for traders and investors to buy and sell these securities, an online broker is required. Only this person has the right to operate on the stock exchange.

The broker is a bank or a company that is licensed and regulated FMA (Financial Market Authority) He trades with his clients' capital and offers the necessary software to carry out trading smoothly and quickly. A good broker offers a demo account, meets a certain need for advice and can act as an asset manager. In many cases, the trading services are offered automatically and calculated by algorithms, as a robo-advisor comparison & real money test impressively shows.

Online trading – pros & cons

Online trading is superior to trading on the trading floor in many ways. However, there are also a few disadvantages to note:

Advantages of online trading

  • enables trading around the clock
  • lower transaction costs
  • Trading possible in real time
  • extensive selection of financial instruments

Disadvantages and risks of online trading

  • internet connection is required
  • allows trading without prior knowledge of what is happening on the stock exchange
  • unreliable providers

This is how dubious online stock exchange platforms can be identified

Certain areas of online trading have a reputation for disreputable speculation. These are primarily trades that are processed within seconds or minutes (scalping). CFDs also fall under this category. In these so-called contracts for difference, no values ​​are bought or sold. Rather, the focus is on the development of a stock market value within a specified period of time.

The betting partners are the investor on the one hand and the broker on the other. As long as these bets take place within the prescribed legal framework, it is a serious way of making money. It only becomes critical if the provider does not adhere to the specifications and resorts to unfair means. In order to separate the wheat from the chaff, traders can use the following key points to avoid being deceived by a dubious platform:

  • Reputable platforms or brokers are controlled by the FMA . license issued by the EU (European Union) .
  • The broker's website must have an imprint . This should be complete and based on applicable law. Therefore, it should list the name of the company and a full address. In addition, an authorized person must be named and a contact option must be provided.
  • The broker should encryption technology . The use of one becomes clear if “https” is listed in the browser line or the symbol of a lock appears.
  • If an anonymization service is involved, caution is advised. Then the provider doesn't want to appear.
  • High profit promises that do not risk warning appear dubious. The principle in stock market trading is that the risk of loss increases alongside the high chances of winning.
  • If you are asked to provide a telephone number when registering, be cautious. Especially if the broker contacts foreign number
  • If the broker makes it a condition to install software , you should refrain from the business relationship. In this way, fraudsters gain access to your own computer and, in the worst case, plunder your account.


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Notes:
1) This content reflects the current state of affairs at the time of publication. The reproduction of individual images, screenshots, embeds or video sequences serves to discuss the topic. 2) Individual contributions were created through the use of machine assistance and were carefully checked by the Mimikama editorial team before publication. ( Reason )