Trading stocks and shares through the use of professional online platforms represents a hobby for some and a full-time profession for others. Every journey begins with the first step and if you are considering a foray into this profitable domain, you likely have a number of questions. Let’s break things down a bit and highlight some of the main tips and tricks which should be adopted in order for your enjoy future success.
The Difference between Blue-Chip and Small-Cap Shares
You may have already heard of these two terms. When trading shares on the open market, many assets will fall into one of two categories. From the broadest of definitions, a blue-chip company is associated with national or international success. It will often be listed on major markets such as the FTSE or the DJIA. The advantages with blue chips is that they tend to offer greater stability and opportunities for long-term yields.
Small-cap shares refer to firms which are associated with less of a market capitalization (value). The benefit with a small-cap holding is that the asset is likely to represent a more cost-effective option when compared to a blue-chip position. However, such an asset is also associated with greater amounts of risk.
Choosing the Right Platform
While the mechanics behind share trading are important to keep in mind, never forget that your success or failure will also revolve around the online platform that is chosen. It is always wise to choose portals which offer advanced features such as real-time price adjustments, in-depth market analyses, intuitive trading systems and a mobile-responsive design. These are some of the very same features which highlight the share trading options available at CMC Markets. Enjoying a lucrative future always correlates with the tools that you employ on a daily basis.
Fundamental versus Technical Analyses
There are two main schools of thought associated with trading shares. These are fundamental analyses and technical analyses. Those who believe in fundamental analysis will examine financial reports and public information in order to gauge the health of a specific business. Technical analysis instead focuses upon the principle that share prices tend to follow predictable swings. Detecting and analyzing these swings will provide the insight required to make the most informed choices.
As you may have guessed, both systems have some very good points. It is for this reason that many traders choose to use a combination of the two based upon their requirements and levels of personal comfort.
Variations in the thread will strengthen the weave. This is another way of stating that it is an excellent idea to diversify your holdings in order to enjoy a greater degree of stability. A well-balanced portfolio is much more likely to adapt to a volatile market and even if one asset performs poorly, it is more than likely that your other positions will offset this one-off loss.
Finally, always remember that trading shares will take time and patience. This learning curve never ends and by adopting the correct approaches from the beginning, you can be certain that you are building a strong foundation.