Most of us have traded in our everyday life, although we may not even know that we have done so.
Essentially, everything you buy in a store is trading money for the goods you want. At tradimo you will learn how to trade the financial markets online — but exactly what is online trading?
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This article will give you an understanding of how trading can be defined and how online trading works. Every trader needs a trading journal.
Use this link to get the discount. We usually understand this to be the exchanging of goods for money or in other words, simply buying something.
Stock Trading: How to Begin, How to Survive
When we talk about trading in the financial markets, it is the same principle. Think about someone who trades shares. What they are actually doing is buying shares or a small part of a company. If the value of those shares increases, what is trading they make money by selling them again at a higher price. This is trading.
You buy something for one price and sell it again for another — hopefully at a higher price, thus making a profit and vice versa. But why would the value of the shares go up? The answer is simple: the value changes due to supply and demand — what is trading more demand there is for something, the more people are willing to pay for it.
Increase in demand means an increase in price We can explain this using a simple everyday example of buying food. This is the only place where you can buy apples. If you are the only person and you only want a couple of apples, then the market stall owner will most likely sell them to you at a reasonable price. Now let's say that fifteen people enter the market and they all want apples. To make sure that they will actually get them before the others do, they are willing to pay more for them.
How Online Trading Works
Hence, the market stall owner can put the price up, because he knows that there is more demand for the apples than supply of them. Once the apples reach a price at which the customers think they are too expensive, they will then stop buying them. When the market stall owner realises that he is not selling his apples anymore because they are too expensive, he will stop raising the what is trading and it may come back down to a level, at which customers will start to buy the apples again.
Photo courtesy Pixel Perfect Digital When you open an account with a United States online brokerage, you'll answer questions about your investment and financial history.
The supply of apples has now increased dramatically. It stands to reason that the second market stall owner may want to sell apples at a cheaper price than the first stall owner to entice customers.
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It also stands to reason that the customers would probably want to buy at the lower price. Seeing this, the first stall owner will most likely bring his prices down.
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The sudden increase in supply has therefore brought the price of the apples down. Application to the financial markets The concept of supply and demand is the same in the financial world.
If a company posted some great results and is paying very good dividends, then more people want to buy the shares of the company.
This increased demand will lead to an increase of the price of those shares. What is online trading? For a long time financial trading was purely conducted electronically between banks and financial institutions.
This meant that trading in the financial markets was closed to anyone outside of these institutions. With the development of high speed Internet, anyone who wanted to become involved in trading was able to do so online.
What is Trading?
Almost anything can be traded online: stocks, currencies, commodities, physical goods and a whole host of other things — at this stage, you do not need to worry about all of these. For now, just keep in mind that if something can be traded, it will be traded.
Out of all of these markets, the forex market is the largest.