31
0
16.09.2021

How to Invest in The Stock Market

The 2008 stock market crash and the decline in quotations due to coronavirus restrictions hit the global market hardly. However, the rally resumed in 2021. The US and EU stock indices continued to break records.  

How can a private trader invest in stocks, and how can brokerage companies provide clients with 24/7 access to the stock exchange anytime? 

Main Advantages of Investing in The Stock Market 

The main benefits of investing in the stock market are: 

⚪ Accurate forecasts based on fundamental and technical analysis. Note, securities quotes are more predictable than currency pairs, gold, silver, or commodity assets. 

⚪ A lower level of volatility than in the crypto market. A rally in the stock market does not lead to a catastrophic change in the rate in a matter of minutes or hours. 

⚪ Trading instruments. Stock indices are a convenient and universal asset that reflects the weighted average cost of shares of different companies. 

⚪ An extensive set of assets. Hundreds of securities of different companies are available for trading in one place. 

Passive Investments 

The passive way of investing money in stock market instruments does not require a user to have knowledge and experience in trading. A person can put money in an investment fund with tens of experienced financial managers and specialists. Their job is to share decisions to buy or sell shares of a particular company and don’t require any approval on the side of an investor. 

The two top popular places to give the power with the most precious possession are hedge funds and ETFs. Each has a specific investment strategy, which is reflected in the choice of securities and the duration of their retention in the portfolio.  

The disadvantage of this method of investing is the entry threshold. They are crushingly expensive to a retail trader with a capital of several hundred or thousands of dollars. 

Active Investing 

Active investment of funds in the stock market means a trader independently chooses securities to buy or sell based on a trading strategy. Trading activity is carried out through a broker – a specialized finance company with an official license and a set of professional trading software. 

Trading options one can choose with active investing: 

⚪ Opening an account in a local brokerage company. It means no double taxation, a minimum of bureaucracy, and loss of time. The only drawback is that you can invest in shares of local companies only. 

⚪ Opening an account with an American or European brokerage. This way, you get access to the top trading assets. Mind a high entry threshold anyway. Furthermore, some brokers do not work with residents. 

⚪ Opting for trading contracts for difference (CFDs) in a brokerage company operating on the Forex market. 

The last option is a simple and universal solution for any trader. CFDs allow you to get access to the quotes of shares of the largest companies in the world without any unnecessary restrictions on the side of local legislation norms. A trader does not own the securities but trying to profit from the change in their price. 

Investing in The Stock Market – Solutions for Brokerage  

Suppose the owner or manager of a brokerage decides to include securities in the set of offered trading instruments. This will require the use of specialized software, like those provided by Profit Center FX. 

The software includes a trading terminal with a professional set of technical analysis tools, quote servers, gateways for connecting to stock exchanges and market makers. Meanwhile, brokers receive round-the-clock maintenance and support from Profit Center FX. 

Rate the article
0 from 5 (based on 0 ratings)

Subscribe to our newsletter

Popular in the blog