Online Trading Learning Guide: “What is Trading?”– Explained to beginners

Trade means buying and selling certain assets on a public stock exchange or on an over-the-counter market. The exchange automatically determines the price of an asset (market) based on the number of contracts (trading volume of buyers and sellers). For online trading, there are different financial products and markets with certain characteristics.”

What is the Online Trading course UK and how exactly does it work? What things do beginners have to keep in mind to increase their money in the long run and not lose it?– In this learning guide for online trading 2022, we will show you the step-by-step process of how the stock market works. With more than 12 years of experience in the financial markets, and more than 300 videos published on Youtube from the “Trusted Broker Reviews “channel, we will prepare you for your first investment.

What markets are available to trade?

There are countless different assets that are freely traded on the world’s stock exchanges. In the following, we would like to give you an overview of the possibilities available for online trading. Different assets have different prerequisites, so you should learn more about the market before you trade them.

Many traders specialize in certain markets to improve their profits. Based on our trading experience, it is always better to focus on one segment of the market because you can combine your power and knowledge.Of course, each trader has his choice open and each trader has his own preferences.

The best-known assets to trade:

Forex (coins):

Forex trading (Wikipedia)is very popular among beginners. Currencies are exchanged for each other and represent an exchange rate. The trader can invest in one currency and sell the other at the same time and exchange the currencies at the end of the trade. The difference in the exchange rate or the value of the coins remains as profit. The advantage here is that they are the most liquid markets in the world and one can act with little capital and high leverage.

Acciones (Valores):

With stocks, you can participate in a wide variety of companies. Profits can be realized through price differences or company dividends. These markets especially like to react to economic and company data. With various financial products, leverage can also be used or a short sale can be carried out (speculation on falling prices).

ETF:

An ETF can be viewed as a basket of various stocks or other assets. They are automated managed funds. They can be traded in public markets. Therefore, it is possible for the trader to invest in a large segment of the market with a single investment.

Basic products:

Almost all commodities are traded on stock exchanges. Profit from rising or falling commodity prices. Popular markets are oil, coffee, soybeans, etc.

Rails:

Gold, for example, is a safe investment for many investors. With the right trading and financial product, you can invest in the price of gold, for example, in just a few clicks. Silver, platinum, etc. They are also very popular with merchants.

Government bonds:

Another very large market is government bonds. Conservative investors buy them to earn a certain interest rate. The price of government bonds is also determined by the stock market and you can benefit from the rise and fall of prices.

Cryptocurrencies:

Digital currencies are a new market for global investors. The market is characterized by extremely high volatility (fluctuation). Big profits or losses can be made here. This new market is developing rapidly and new cryptocurrencies enter the market every day.

How does the price on the stock market arise?

Knowledge of the stock market is very important in the investment sector. You definitely need to know how the price is made up in the stock market for any asset. This can be used, for example, to derive various trading strategies. In the following image, we will explain the order book and the price construction of the markets.

The price is determined by so-called “limit orders” and “market orders” in the order book. Limit orders are placed on Ask prices and Buy prices (Bid). These orders describe what other traders want to buy or sell at a certain price. Only limited orders would not move the market. Limit orders are “placed” in the market and are waiting to be executed. This is done through a market order. The trader manually places a market order through a buy or sell.

This allows you to directly fill limit orders on the bid or ask. If there are no more limit orders on the bid or ask and more market orders are added, the price must change because the bid and ask must match each other.

Limit order

The limit order is only executed at a certain price in the market. Limit orders are passive and are waiting for a market order to consume them. There are only buy and sell limit orders. The trader is choosing a price at which he wants to sell or buy. The trader is then waiting until the market executes the order.

Market order

The market order is executed directly at the next best price. Market orders are aggressive and can change the price very quickly. Traders choose the market order to buy or sell directly if they wish. A market order must be executed at the next price and it is not necessary to execute a limit order.