The Tools to Help You Invest

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You would have thought, with all the news coverage that the stock market gets, that everyone would be trading. This interesting fact is, there are not that many people investing or trading in the market. Like tennis for every one person playing there are 50 watching.

Most people stand on the side lines and wonder how best to get started but never find the answer.

The very best way to get going as an investor or trader is to buy a few books on investing like 101 Ways to Pick Stock Market Winners or xxxxxxxxxxxxxxxxxxxxxxxxxxxxx.

(zzzzz or ZZZZZ’s an intrrodction guide to yyyyyyy. Best a brokers training guide)

This will give you a good handle on the basics before you start thinking about what kind of investing or trading you want to do.

The best place to enter the market is to open an account with a stockbroker.  Buying good shares for the long term is the basis of many fortunes and is how the world’s richest man, Warren Buffett, got to be the Croesus of our era. As such, there is no finer way to kick off your relationship with the market than to invest in stuffy shares.

XXXXX is a market leader in broking, it has a solid platform, low costs and a great reputation for service.They are exactly the kind of broker you should search out and sign up with.

At first people find investing complicated but it doesn’t take long buying blue chip shares to get the hang of how it all fits together.

Once you have mastered the basics of investing you can think about moving onto the higher risk world of trading. Trading can be fun, lucrative and fascinating but the potential rewards do not come without many more risks.

While the various kinds of trading are much the same thing in practice, guessing which way a financial instruments, a currency, a commodity, an index or a share price will go, you can split trading into three segments.

Forex Trading

Forex  is a global favourite because trading currency is a 24 hour affair. The only significant break in trading is the weekend. This massive market is full on, day and night, all around the world. Trillions of dollars are traded every day.

There are only so many currencies in the world and fewer worth looking at. This simplifies the game to a few currencies everyone knows and can follow.  However, Forex is very high risk because the amount you can trade for a small deposit is huge so that a small mistake can wreak havoc. But a small move your way will be very lucrative. This is the oversized punch that Forex trading packs and another reason traders gravitate to it.

Xxxxxx is in the top echelon of forex platforms……………blah blah .

Spread Betting

In the UK, spread betting is the most popular platform for traders. They provide slick trading platforms with superb tools, good leverage and a way to pay NO tax on profits. It’s a good place to start trading because beginners can buy very small positions in shares at very low transactional costs and can in effect play the trading game without risking much money.

For example on xxxx I could buy £1 a point of Vodafone, which in effect is only £193 of shares (as I write) whereas if you bought the shares themselves, you’d want to buy £1,000 worth just to make sure the broker’s fixed costs weren’t too big a percentage. With their famously powerful platform you can trade from your destop, over the phone or via a mobile app.

Spreadbetters like xxxxxxx don’t charge commission, they build that into the spread between the buying and selling price and also make money from the interest on the leverage they offer.

For someone who starts trading with £2,000, for example, leverage gives them the ability to trade £20,000 of shares or much more of an index like the FTSE 100. You have to be careful using this leverage, though, as the more you use the riskier your trading. On the other hand, the ability to leverage £2,000 to £20,000 does help the beginner get started small and then with luck grow.

CFDs

For the big guns, the choice way to trade is CFDs. CFD stands for contract for difference. It’s a financial derivative designed for big traders and their trading needs.

With a CFD the trader avoids the profit-killing 0.5% stamp duty on shares so that a CFD of Vodafone is a contract between you and the markets to pay out the profit or loss on a share. You can just consider it a technical loophole way of buying shares and skipping the stamp duty trading tax.

Stamp duty is a massive issue for big frequent traders. Imagine trading a stock 100 times a month and paying stamp duty each time. You’d have spent 50% of the share’s value in tax. This is a big reason why CFDs exist.

As CFDs are for big trades, CFD brokers like xxxxxxxxx often provide a way to access the market directly and place your trades as if you were a bank or market maker.  Again, because CFDs are for big trades they often come with low trading costs and significant amounts of leverage. CFDs are where the big boys play.

Once you’ve mastered investing and had success in trading with a spread better, CFD trading is a logical progression.

ADVFN’s level 2 product shines a light into the inner world of stock market order books and big time trading, it is the core of the market. The order book which is illuminated by ADVFN’s  Level 2 tool is the shark tank where the stock market’s hired guns slug it out. Watching Level 2 is like looking at a planetarium of money. If you can work out what is going on you can make a mint.

Whether you are an investor or a trader, profit comes from knowledge and execution and with the right tools for information and for trading you are in good shape to proceed.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

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