Trading on the financial market offers numerous possibilities for buying and selling. However, there are some financial products that are particularly popular. One is the stock market, which has been operated for many centuries, and the other is currency trading. This has also been offered for some time, but there has been an exotic novelty for some years now. The so-called crypto currencies caused quite a stir in the financial world in 2009. For some, they were regarded as a great hope for the economy and for others as the greatest risk of all. Now it is also possible to trade crypto currencies on the financial market. This does not only show differences, but also similarities to stock trading. Which these are and which strategies are to be used, in the following article once more one lights up.
The trade with shares
The first shares were already issued in 1200, around which time the first shares in companies and projects were issued. The background for the company when issuing shares is the procurement of new liquid funds. A share is a security, which grants the buyer different rights and obligations. The first purchase takes place between the company and the shareholder, after which the buyer may also sell his shares to other market participants. The purchase gives the company a financial injection and enables it to make new investments in the market itself. The buyer of a share has the background idea that the value of the share increases or that the company operates successfully on the market, whereby it ultimately generates profits, to which the shareholder is entitled, depending on the number of his shares. Other opportunities for income from shares are through interest and dividends or the possibility to sell the share profitably to other market participants after an increase in value. Accordingly, trading in shares has certain similarities to buying real estate or gold. After the investment one assumes an increase of the value.
The risk of stock trading
The aim of buying a security is therefore to make a profit by making an investment and either receiving its dividends, interest and profit shares over the long term or, after an appreciation in value, selling the share back to other market participants. The risk in trading lies in the fact that the value can of course also be reduced. This happens, for example, through negative news about the issuer (the publisher of the share), failures in the market or through social and technological developments. If this is the case, the buyer makes losses. The buyer must therefore carry out a comprehensive analysis of the company, its opportunities, activities, potential, competitors and the market in general before the purchase. Then an evaluation can take place, which ultimately leads to the fact that one buys shares of a company or not.
Another component of the financial market is the Foreign Exchange Market, or Forex for short, which encompasses trading in currencies. In contrast to the stock market, no currencies are bought and sold profitably again, but rather the price developments are taken into account. The prices on the chart can rise or fall. This is where the so-called binary options come into play. As a participant in the Forex market, you can exercise either a "call" option, which is the expectation of a rising price, or a "put", which is the option of a falling price. The basis is all the currencies in the world with their respective exchange rates. As a concrete example the EUR/USD, which is currently at 1.17 points. So if you exchange 100 Euro for the American Dollar, you get 117 US Dollar. As a trader on the Forex market, trading looks like starting from a rising price, selecting a "call" option and if the price reaches this value within the selected time frame, which can be between one second and several months, profit is generated. However, if this rate falls, the money is lost and all of it is lost. This is a difference to stock trading, where the value cannot be completely out of the money, but is gradually reduced over the term. With Forex there is either everything or nothing to get.
Trade in crypto currencies
Although the article deals with the differences between stocks and crypto currencies, since a crypto currency is still a currency, it is advantageous to understand the basics of the Forex market. Crypto currencies are a very special product on the financial market because they have properties like normal currencies and also stocks. They can either be traded with "call" options and "put" options or bought as a normal investment. This is the strategic difference to trading shares. If a crypto currency has no high value and also no large increase in value is to be expected, one can trade nevertheless with it, by setting on the price development of a certain crypto currency. On the other hand, it is possible to buy individual shares or complete crypto currencies and then expect an increase in value.
The best known crypto currency is the Bitcoin. At its zenith this had a value of scarcely 20,000 dollar for a Bitcoin. The value fell again very quickly, but still some investors earned an incomparable return with them after buying a Bitcoin for a few dollars many years ago and thus, by betting at exactly this time that the price will fall. So with crypto currencies, profit generation is possible through trading, up and down price movements, as well as a kind of investment. A clear advantage of crypto currencies is that trading can be completed much faster, because time frames such as 60 seconds can be selected as in Forex.
The trading place for crypto currencies and stocks
Trading takes place online on the Internet. On the platforms of online brokers you can see at a glance which provider also has crypto currencies in its repertoire. A broker, who convinced for the trade with crypto currencies, is https://www.esports.net/bitcoin-betting-guide/. Important for the selection of the right broker in general are the licenses, the certificates of different testing agencies and of course the positive customer ratings. For new customers, two aspects are essential. One is the free provision of analysis tools and the offer of a demo account. The latter offers the opportunity to trade with virtual money and thus gain risk-free experience. The technical analysis tools are ingenious tools that automatically analyze the chart of a financial product and recognize trends. This makes trading a lot safer. These tools can also be used for crypto currencies and with them one is able to analyze the chart for price developments as well as value increases for investments. Of course, stocks are also an integral part of online brokers as well as topics, news and explanations about the financial market, its products and their trading.