It is probably the most frequently asked question in the trading world: What’s the best thing to trade or invest in? Eventually it’s important that you trade and invest in the one thing that suits you best; but which way of trading is, generally speaking, the most profitable? Well, the most profitable way to trade is online trading in stock, commodities and index funds. In this article we look at what is the best way to trade.
Why is online trading the best way to go?
- You don’t pay any commissions, so you have a better chance at making more profit.
- You can profit from a decreasing price by going short.
- It is simple to trade in stock, commodities and Forex.
- You can even profit short term through online trading.
- You can try trading online for free using a demo.
What do you need for a good trade?
In the past the best trade was purchasing the stock that then went up the fastest. Nowadays this isn’t the case. First of all, you should take a lot of time to find a good and stable stock. Thanks to the economic crisis, this isn’t an easy task. Long-term trading isn’t sensible as the prices are very unstable and thus the profit potential is limited.
The second reason why it is sensible to trade online is the fact that you also profit from a decreasing market. You can go short on a stock and make money when the price goes down. Think of the potential when you can profit from both increasing and decreasing markets.
The price mostly moves between two points; thus you can make more by buying at the right time and selling at the right time.
Go for the better trade
When you trade online through a broker, you can profit from the price of a stock, no matter what direction it’s headed. This makes the ‘what to trade’ question irrelevant; all you need is movement and volatility to make money. It is, however, very useful if the price of a stock can be predicted to a reasonable degree. There are three market situations:
- Mostly going up
- Mostly going down
- The price moves steadily between two points
By opening positions at critical levels, you can profit from huge movements going both up and down. You can make the most out of every stock you pick using this form of trading.
When you trade online, you can choose to trade whatever you want; whether you want to trade stocks, bonds or Forex, it’s all up to you. The question of what to trade isn’t too relevant anymore as the movement and volatility of the market dictates your potential profits. Always look for predictable, reasonably stable markets that you can profit from.