We have repeatedly stressed the importance of education when it comes to start and/or to continue trading. As well as trading in binary options, to start trading shares is very important to learn the basics and all that is following.
Below you will find answers to many questions about how, what, where and why of share trading and what differentiates it from forex and options.
Share trading has a lot of advantages. One of the greater ones lies in the fact that it is always in full force. Even the older strategies are always valid for use and investors have years to develop and hone their skills.
Compared to forex, shares are moving much faster than the currencies so they have higher volatility, allowing gains (and losses) significantly higher. This is why it is possible to buy shares for a medium or long term investment.
In addition, there are some correlation between the performance of most of the shares and other ‘assets’, in particular, the indices, which makes easier predictions for traders. Information and news about stocks abound and the number of shares on the market is high. Unfortunately, most of information is private, because they concern revenues and profits of a company and they are sometimes subject to insider trading.
Shares are likes forex or binary option when it comes to trade. Set up an online account with bank details and a debit card and it is possible to start trading almost immediately.
What differentiates shares from options is the cost. An option costs a fraction of the cost of a stock. Plus, you need to pay taxes on shares. There is a percentage of tax on all share purchases and profits from the shares are taxable, too. Furthermore, risk management is lower buying an option because the only risk is to lose the equivalent of the cost of the option.
Differences between shares and forex are much more. It is always possible to trade forex because markets are open everytime, starting with Asia when US is closed, then Europe opens and also US etc… This means that you can trade when you are more comfortable.
Stocks and options trading must always deal with fees. Forex do not because brokers earn money with the spread.
Market shares or options is managed by brokers and they add time and cost to the process. In forex, brokers will simply connect to the market.
Speaking of ‘education’, there are many books and articles you can rely on to learn all is needed to start or to move to the next level and become professionals. You can also learn from the stories of big traders.
However the most important thing to learn is of course how to read the market. In this regard, traders must be able to juggle between technical and fundamental analysis, market indicators, platform search criteria etc…
Trading par excellence has always been on stocks, which can give great satisfaction but also biggest disappointments, due to the greater fluctuations in prices and the impact of the emotions of those who invest in these markets.
Perhaps this is just the ‘charm’ that captures a lot of investors. Even beginners and smaller traders push them to operate on the stock market, even after they tried already forex trading.