Stock trading is buying and selling stocks through an exchange. It normally involves a broker who charges a commission to help you with stock trading. They are simply professionals who are licensed to trade in stocks on the trading floor of the exchange. Also, a stock broker can help you place trades electronically or by phone.
Thanks to advancement of technology, it is even easier to trade in stocks online from anywhere in the world. When it comes to secure financial transactions, trading stocks online is considered as good as trading stocks offline. However, it is important to choose a high-end encrypted trading platform as this will ensure security of transactions you make over the internet.
Types of Trades to Make with an Online Broker
After you have chosen a broker, your next step will be buying commodities, such as stocks or bonds. While there are many types of trades that you can make, it is important to learn those that are simple and do not lead to big losses. For instance, ‘limit order’ or ‘market order are simple concepts that can easily be understood with a little bit of homework.
- Market Order – This is the most common and simplest type of stock trade which tells your broker that you want to take whatever cost is presented to you at the time your order is executed. While market orders are the easiest ones to accomplish, they are subject to the lowest possible broker commission.
- Limit Orders – With this type of trade, you can limit either the maximum payable cost or the minimum price you are ready to go with when trading a stock. While limit order is as simple as market order, it does not come with a guarantee to be executed by the stock broker.
- Stop Limit Orders– Also known as stop loss orders, these types of trades are used to lock in profits from lucrative trades. Stop limit orders automatically convert into market orders when a predetermined value is reached and known as a “stop price”.
- Bracketed Orders – This type of trade is known as one of the ways to protect your profits and mitigate losses automatically. Bracketed orders allow you to set a trailing stop which will be either fixed or a proportion spread. You can however also set a higher limit which will lead to the stock being sold when reached.
- Sell-Short and Buy-to-Cover Orders – Theoretically, shorting a stock or selling short is a very speculative practice that can either result in unlimited losses or profit from a stock failing. It involves a few important rules, such as having margin privileges on your broker account. Also, selling short requires you to maintain enough buying power on your account so you can place a trade to cover the order on your short deal.
Online trading platforms like GigaFX helps you educate yourself about the trading option you choose so you know about the ways to play safely and increase your profit. They have all the necessary tools and equipment you would need to place a trade at ease. Above all, the site offers you a safe and risk-free portal to avail all trading options for affordable costs and with excellent customer support. Read more about GigaFX in this GigaFX Review.