Financial markets, like so many other things, were once inaccessible to the masses. That doesn’t mean the average person couldn’t invest in stocks et al. However, because of the way the financial industry was set up, the barriers to entry went beyond someone without specialist knowledge or access to someone with specialist knowledge. Today things are different. The Internet has opened up the market, lowered barriers to entry and made everything more accessible.
The data confirms this point. Major online platforms have over one million monthly users. Some of these users are traders, others are investors. We’ll discuss the differences between trading and investing as well as the basics and goals of each in a few moments. However, the fact is that the financial markets are buzzing with activity thanks to the Internet.
Internet builds a bridge
The engine of this change, as we said, is the Internet. There are more than 5 billion Internet users in the world. Not everyone makes financial investments. However, any adult with some pocket money could do it if they wanted to. This is the important point and the one we need to unpack so that you can take advantage of the available resources. Simply put, online trading platforms are run by brokers. These brokerages act as bridges between you and the financial markets. They open the door to stocks and such, and for that they charge certain fees. The good news is that the fees are low.
Additionally, brokerages have the ability to dictate certain trading conditions. This means you don’t have to trade the same way professionals do. In practice, you can invest small amounts and use features such as leverage and stop-loss limits. Because online platforms have reduced the cost of investing and made markets accessible through desktop computers and mobile devices, more and more people are buying and selling. However, this is not the only reason people use the internet to make financial transactions.
A well of information
Modern platforms contain a multitude of resources. For example, if you are a complete beginner, you can use an online platform to learn the differences between trading and investing. These terms are often used interchangeably (we have done so in this article). However, when it comes to the technical aspects of financial markets, these terms refer to slightly different things. Investing generally refers to the process of buying something and holding it for a long time. In other words, it is a medium to long term investment. Trading is more active because you are buying and selling with the aim of generating short-term profits.
You should know the differences between trading and investing before entering the financial markets. Once you’ve chosen your strategy, you need a plan. This is where trading charts, news articles and technical indicators come in. However, what is also unique in online trading is the fact that you can follow professionals. You can do this manually by watching social media feeds and subscribing to daily email updates from established traders and investors like Bill Ackman.
You can see how the professionals work
You can also use automatic tracking tools such as CopyTrader. These tools automatically mimic the trades of the people you follow. The software adjusts the size of your investment so that you don’t spend more than you can afford. However, the advantage of this type of trading tool is that you can follow and copy professionals. That doesn’t mean you shouldn’t learn the basics of trading. However, the copy trade is a proverbial head start. It’s a helping hand. This is why online trading has taken off and, more importantly, why it has opened up the financial market to non-financial types.
Trading and investing involves a certain degree of risk. The internet has not made it a surefire way to make money, as financial markets are unpredictable. However, if you take advantage of available resources, apply yourself and invest wisely, there is potential in the financial markets. This is the real advantage of the Internet and the reason why we have seen a revolution in online commerce over the past two decades.