The stock market has been around for a long time. Along with the technology changes, the stock market has also evolved and now has online trading. Before we tackle online trading, let’s take a look at what the stock market is and how it works.
A stock is actually a share in a corporation. People who invest or buy stocks are putting their money for the future of the company. The share prices changes depending on the performance of the corporation and the condition of the economy of the country. If a company offers its stock for the first time to the public, this is called IPO or initial public offering. It is also called “going public” by many.
Once the business has made a profit, the money is shared among the stockholders through a dividend. If a stock gives out dividend often, that is called income stocks. A business can also opt to save their dividend and invest it again through business improvements or adding employees to the company. This is called growth stocks.
In buying or selling stocks there are middlemen called brokers. They charge commissions for buying or selling stocks through them. Not anyone can be brokers though. Brokers need to be licensed in order to negotiate in buying or selling the stocks. The exchange can be done through phone, in person, or electronically.
The exchange that is done in person or on the trading floor is usually done through auctions. Now that technology has become a player in the stock market, a broker can be a software that replaces a human broker. Of course, the exchange still involves money, but you don’t get to talk to a real person. Instead, you will rely on your own judgment when buying or selling the stocks and request for the exchange. Some have features that have the option for you to get advice from a real live broker.
If you are new to trading, social trading is something that you need to consider using. Social trading gives users access to the same functions that traditional platforms have. You will have access to the charts, indicators, and the buy or sell tools. The difference between social trading networks is a social function. Users will have the ability to share their strategies and decisions to others. This became popular in cryptocurrency.
One of the social trading platforms available is eToro. eToro is trading that started in 2007. eToro has been serving UK clients under an FCA regulated entity. They also serve Australians through an Australian entity. All the other users of eToro forex are served under a Cypriot entity. If you want to know what exchange eToro is listed, it’s not in any list of official exchange. It doesn’t have an annual report on their site and is not affiliated with any bank. However, it is one of the best trading platforms available in Europe and it’s safe to use because of the regulation of the UK financial authorities.
eToro trading is actually a CFD or contract for difference broker. If you do not know how a CFD broker works then you should get familiar with it. It is a very complicated broker to use in the stock market. The leverage is very low and you could lose a lot of money because of the leverage. People who go for CFD are not afraid to take the high risk because of the bigger monetary gain that they will be getting if they win in their stock investments.
Here are the features of eToro that you may find useful:
• They have a verified icon for investors. In order to get a verified status, all you need to do is give out your real name and a photo. Of course, this will be verified by the customer support of eToro before giving you the verified icon. It gives assurance to users of the system that they are talking to a real person and not to a robot.
• eToro bonuses are given to traders that are copied by a lot of investors. They get a commission each month if they get a lot of copiers. eToro now has a system that will help create a lot of interaction between the investors and the copiers. The history of popular investors is displayed so that copiers may choose which investor to copy.
• Trader charts are also added as a feature so that copiers may study the trend of the popular investor.
• eToro has a statistics propriety tool that has a score table showing the number of copiers thus you can see the risk involve over a period of a year when you make an investment. It’s very easy to use and investors make use of this tool as well to check their own performance.
• The trader charts is a feature that has been added to see the traders that you can copy. You can use this feature to compare traders and will help you decide which one you should copy.
• eToro is free to use. You are only charged overnight rollover fees and the broker fee cost once you started trading. The rollover fee of eToro maybe higher than other brokers, but it will display the costs before you do an exchange.
• There’s a lot of training materials available in eToro trading for first time traders. Webcasts and daily news are available on the site so you’ll be updated with the trading trend. Since eToro is a social trading platform, there are a lot of people who can answer your questions about trading.
Can You Make Money with eToro?
Since it’s a trading platform and we’re talking about stocks, you can definitely make money with eToro. It’s not easy, however, you need to be willing to take a risk to invest in order to make money. There are always low-risk profitable investors to copy, but there are only a few of them. Some of these investors can leave the trade open for several months and can force you to have a long-term investment with the possibility of a fluctuating investment.
It’s not easy to just sit back and relax once you make an investment in eToro forex. You have to monitor the progress of your investment to make sure that you will not lose it.
Since you are taking a risk in using eToro, here are some mistakes most copiers do that hinder their success.
1. Not Monitoring your Portfolio
A lot of copy traders make the mistake of thinking that after they have made their investment, they can just relax and wait for their money to come in. As with any business, you can succeed if you invest time, money and effort in trading. Do your research so you’ll know the latest trend and make sure that your investment is still safe. You don’t really need to monitor it full time, but you need to check on the updates regularly.
2. Not being familiar with the strategies of the investors.
If you are new, you may just check the performance of the investor if they are making money or not, but one very important thing that you need to do when you look for an investor to copy is their history. A lot of investors may be successful today, but their statistics may show that they are using a strategy that is only successful short term. You need to be familiar with the different strategies used in trading so you will copy the trader that uses the right technique or formula to succeed. It’s actually so much better to choose an investor that has a small, but steady profit than copying an investor that is only successful for a short period of time and lose a lot in between as well.
3. Spending all your capital copying just one investor
Spending all your capital with just one investor in stocks is a bad idea. In fact, it’s better to choose several investors to copy. Why is that so? Remember that investing in trading is a risk. In order to lower your risk of losing money, you need to invest in several good stocks. Be wise in distributing your capital and study each popular investor carefully.
4. Not familiar with the social trading networks
If you are a newbie, do not get into a social trading platform just by one recommendation and because you see a lot of potential money in it. You need to know how it works first. There’s more to it than downloading a software and clicking on several buttons on it. You need to know how trading works and the risks involved in the business. This will reduce your risk of losing your money in the long run. It’s wise to be a part of a social trading community as well while you’re learning the trade.
In conclusion, social trading is a very profitable business to be in, but in order to succeed you need to be familiar with how the stock market works and how you can succeed with your investments. eToro trading is an easy to use social trading platform. It has a lot of useful features that you can use if you are a beginner. If you want to succeed in investing in the stock market, but you don’t want to use a broker, I would recommend using eToro as a broker.