What is the best online share trading strategy and system to follow?
The first question to ask is what is your trading strategy?
Do you trade with any of these following systems:
1. The trend is your friend
This means that a share that is trending well in one direction is likely to continue (depending on the market that you are trading – you will need to confirm that this holds true for your target market).
2. Mean reversion
When a price dips sharply in the short term, it is likely to rebound back up in the short term. Again you should test this on the market you’re trading to see that this trend holds true for that market.
3. Penny dreadfuls
Although with a low probability of win (low win loss ratio), if it rises, the rises can be very striking indeed with many hundreds and thousands of percentage increases.
4. Fundamental analysis
This means that you analyse which stocks and shares are possibly likely to go up because of fundamental reasons such as good management, new discoveries and breakthroughs, strong market demand, advantages over competition, good PE ratios etc.
These share and stock trading strategies and systems are based on different premises and as such you can build trading systems around them.
The second question to ask is whether you have a good stock broker.
Why is a good stock broker so important? Well, the reasons are:
1. A good broker can give you competitive brokerage rates. So your fees per trade stays low and you can make more profits.
2. If you are a sophisticated investor in your country (definition is different in each country), then you can take advantage of share and stock trading opportunities that non sophisticaed investors do not have access to. These include purchasing stocks at even below market prices.
3. If you are asking your broker to keep you informed of which stocks are moving in accordance with what you’re looking for in your system, then a full service broker that is able to help you can be good if you do not want to look at the stocks yourself.
When you look at any online stock trading website, ensure you are clear on what they are offering, whether it is a simple or full share online stock trading service.
An online stock broker may be only online, or they may have phone facilities, It depends on what you want and the fees can of course be higher for a full service broker. Stock brokers in general vary widely in their specialities, in their services, and their knowledge of trading strategies and the current state of the market and stock rumors and stories that are going around.
It depends on your goals, and what you need as to whether a trading platform is adequate or not.
Ask yourself the above questions, to help you choose the right strategy and broker for your needs.
And how do CFD’s relate to shares? They are like trading shares on leverage (you do not have to use all the leverage, but it is available) and you are buying a market made instrument based on the underlying share or in DMA CFDs, could be placing orders on the underlying market product.