Trading

Introduction

The trend towards the democratisation of online trading is nowadays a real observation. This generalised trend leads to the following question:

-What is online trading ?

Online trading is simply buying and selling financial securities via an online trading platform. These applications via a trading platform are provided by brokers who act as intermediaries to allow traders to invest in the markets. They are accessible to anyone who wishes to invest on the stock exchange and trade financial instruments on the markets.  They are accessible to anyone who wishes to invest on the stock exchange and trade financial instruments on the markets.

Recognized as a source of income, online trading is attracting more and more people. Moreover, trading could represent for some a new career horizon. 

In addition, trading has an important psychological dimension. Emotions about the financial markets, the ability to manage one's attitude to events impacting prices, and the willingness to receive training in line with the profession of trader are all part of this psychological dimension.

Ultimately, online trading changes into speculation on the financial markets. The objective is to take advantage of price variations between the time of purchase and resale. In some situations, online trading allows you to sell a product that you do not own, in order to benefit from a variation in the opposite direction. The explanation of this will be sent to you as we go along.  

History

Because of the advances in information technology, that allowed high speed computing and data transfer through an Internet connection, online trading really developed in the 1990s.

Perpetual technological evolution allows for constant growth in this sector, particularly following the rise of fibre optics and the exponential growth of computing power.

WALL STREET BEFORE THE AGE OF INTERNET

The most important players in the financial markets are as follow :
• Central banks
• Banks
• Hedge Funds
• Investment Funds
• Brokers
• Professional Investors
• Individual Investors

Below, it is an estimation of the number of active traders in the world in 2017, approximately 9.6 million people

There has therefore been a real democratization of trading, this activity is now within the reach of the greatest number of motivated people.

Characteristics of a trader

Efficiency, characteristic of a trader, is generated by a strong analytical capacity, a conditioning to understanding and risk management when taking a position. Analysis, the trader's intellectual source, implies a temporal practice on the manipulation of his software in order to master the tools at his disposal. From this trait is also deduced the need to formally take note of the indicators, for a successive weaving of your trading strategy. Risk management, the trader's watchword, is the keystone of his money management. The trader must be able to minimise his money losses. The combination of these characteristics allows an agile understanding of how markets work. It enhances the ability and aptitude to analyse and interpret the price fluctuations of different products in order to generate gains.

The different types of trading

There are several trading styles in which each employs a very different trading method:

Scalping

A scalping trader is an experienced trader who is able to carry out extensive market research. The technique includes placing numerous orders with low profits over noticeably short periods of time to generate a return. This type of trading requires an important amount of capital in order to place a sufficient number of orders.

Day trading

A day trader is a trader who takes positions over short periods of time ranging from a few minutes to a day. He relies on technical analysis of charts to take positions and usually uses leverage to maximize his gains. His capital is therefore not necessarily important. The day trader therefore takes advantage of the high volatility of the markets to realize his gains. The advantage of this type of trading is that it does not require a large amount of capital.

Swing trading

A swing trader takes positions on a period ranging from one day to several weeks.

Position trading

Un trader qui opte pour le trading de position cherche à profiter de l’intégralité de la tendance en cours et à réaliser des bénéfices sur du moyen terme. Ces trades sont des investissements sur les prévisions du marché. Il utilise l’analyse financière afin de prévoir l’évolution d’une société, d’un secteur ou d’une économie. Ce trading nécessite également un capital important.

SUMMARY OF THE DIFFERENT TYPES OF TRADING

What are the steps to become a trader?

Beforehand, with a view to acting with peace of mind, you are advised to familiarise yourself with the functioning of the markets in which you are interested in investing. From this direction of becoming aware of your capacities to act on the financial markets, Gravity Market offers a free and non-binding demonstration account via the MT4 Platform. Indeed, the demo account allows you to familiarise yourself with your trading strategies for better risk management and will give character to your trading profile. The use of a demo account will lead you to the acquisition of methods and mechanisms that will allow you to define your identity as an investor. In the end, taking a real position is materialised by the choice of a broker with professional ethics. Thus, Gravity Market presents itself as a broker on the financial markets regulated by the SVGFSA, supervised by the AMF.

Gravity Market offers many advantages that allow fast order execution on a familiar platform.

CFD Trading

A CFD means "Contract For Difference". It is possible to buy and sell one or more CFD products.
To better understand CFDs on the stock market and their importance to the individual trader, we will list the characteristics of a CFD :

• A CFD is a derivative applicable to all financial products (stock indices, shares, forex, commodities).
• By trading CFD products it is possible to speculate up or down on all these products.
• By trading CFDs it is possible to use leverage, allowing you to increase your investment without increasing your capital. 

The use of CFDs for trading is therefore an exceedingly popular choice. Gravity Markets offers you the opportunity to invest in the major markets using CFDs and take advantage of the many benefits they provide.

 

EXAMPLE OF A CFD CONTRACT FOR A BUY (LONG) OR SELL (SHORT) POSITION

For more details on CFDs, follow the link below.

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