Start investing in 5 steps
Investing is easy, as long as you know what to do. Many websites use tricky terms and try to deter new investors. We do not like this! Investing should ultimately be fun, and we are happy to help you start investing.
On this page you will find all the information you need before you start investing. Before you can start investing, you must first go through the following steps:
- Step 1: decide where you want to invest.
- Step 2: determine your goal.
- Step 3: decide how much money you want to invest with.
- Step 4: decide what you want to invest in.
- Step 5: learn to invest well by practising.
Is investing a good idea?
Before you review the steps, it is important to ask yourself if it is wise to invest money. Do you have money you can miss for a longer period of time? And can you live with it when you lose money? Then you can consider starting investing.
You invest with a broker. A broker is a party that makes it possible, for example, to buy and sell shares. Where you can best start investing depends on investment style. There are two ways you can invest.
You can choose to actively trade in shares. When you actively trade, you buy and sell them on a daily basis. This way, you can take full advantage of price fluctuations. A good party for active trading is the Plus500 platform. Do you want to open a free demo at Plus500? Click the button below to open an account directly:
Some investors prefer to buy shares for the long term. When the share prices increase, you can make a profit. Sometimes, you also receive a part of the profit in the form of dividends. As a beginner, it is smart to choose a cheap broker. That way you can get a better return with the same amount of money. At eToro you can buy shares without commissions. With the button below, you can open a free account immediately:
Before you start investing, it is important to consider what you want to achieve. Before you start trading it is important to set a clear investment goal. Some people prefer investing for short-term price gains, while other people invest to build a comfortable retirement for the future.
In any case, the fact remains that investing is more profitable in the long term than saving. In the article why you should invest now you will discover the greatest benefits of investing.
After you have your investment goal, it is important to determine how much money you can and want to invest. Remember that investing always involves risks. Many novice investors make the mistake of investing money they cannot really miss. Avoid this by making a clear plan, so you immediately know how much you can and want to invest!
Before you start, it is wise to decide what you want to invest in. After all, there are several possibilities.
Start with shares
Stocks are often the most popular for investing. Buying and selling shares can help you make a nice profit. In addition, you often receive a profit portion in the form of dividends. Do you want to know more about buying shares? Read our article on this topic:
Investing in options
Options are a little more complicated. Before you start investing in options, it is wise to gain some knowledge. With options, you can speculate with a higher leverage. A lever makes it possible to take a large position with a small amount of money. You can also speculate on a price drop with options. Do you want to know more about options? Read our course about the subject for more details:
Bonds are perfect for the novice investor who wants to avoid risk. Bonds are debt securities. At the end of the term you will get the issue back. As a result, the price development is less important. Do you want to know more about investing in bonds? Read our article on this topic:
Raw materials or commodities
Trading in raw materials can also be very interesting. Precious metals such as gold and silver are widely traded, especially in economically bad times. Oil can also be an interesting investment. By investing at the right time, you can achieve good results with raw materials. Do you want to know more about investing in commodities? Open our article here:
New and hip is trading cryptocurrencies. Many people have started investing in cryptocurrencies. Cryptos do come with higher risks. On the other hand, the price can suddenly rise considerably overnight. Read more about it here.
You can also invest in the more traditional currencies. In the article investing in Forex you can discover how this works.
Consider the risks
Each type of investment involves different risks. It is therefore important to think for yourself what your risk profile is. What risks are you willing to take? How do you prevent sleepless nights? For example, people with low-risk appetite will opt for bonds, while high-risk investors will opt for cryptocurrencies.
Starting to invest is not difficult. However, getting a good return on investing can be a lot more challenging! It is therefore important to practice first, so that you understand what influences the share prices. You can use a free demo account for this. With a demo account, you as a beginner can try out the possibilities completely without risk.
Do you want to open a free demo right away? By using the button below you can compare the different trading demos! This is a must when you are going to invest for the first time.
Why do you have to start investing now?
Today is the perfect time to start investing. But why would you? In this part of the article we discuss this briefly.
Low return on savings
A long time ago, you received a fair amount of interest on your savings. This is no longer the case. You are lucky if you receive any interest at all. For many savings accounts, the interest rate is 0% and banks even consider charging a negative interest rate in the future.
At the same time, you can see that the stock markets always have performed well over a longer period of time. The average return on shares is as much as 6 to 8 percent depending on the period you review. If you want to achieve a higher return, it is definitely advisable to invest.
Protect yourself from inflation
Inflation is the process where the products you can buy become more expensive. The consequence of inflation is that you can buy less with the same amount of money. When you park your money in a savings account, your money slowly becomes less valuable.
It is therefore wise to invest part of your money in shares. The return on shares over a longer period is higher than the return on a savings account. This at least gives you a chance to beat inflation. Of course, you have to take into account that you can lose (part of) your deposit.
Saving for big expenses
By investing, you can collect a large amount of money in the long term. For example, you can use the money to retire, or you can buy a nice house. Investing is faster, especially when you use the power of compounding.
When you utilize compounding, you reinvest the return you get with your investments. You will receive interest on interest. That way, your assets grow exponentially in the long run!
Fun & accessible!
Personally, I also invest because I like it. It is a lot more interesting to follow the news when you know you are also co-owner of some of the companies mentioned. Investing is also very educational and as a beginner I am sure you will learn new things.
With the advent of online brokers, investing is also much more accessible nowadays. You do not have to pay a high transaction fee and you can already buy a stock with the click of a mouse. If ever there was a good time to start investing, it is today!
Indispensable tips for the novice investor
Beginner investors sometimes make mistakes. Online brokers offer user-friendly software that allows you to trade in well-known shares within minutes. However, few beginners know how to get a good result. As a beginner, how do you make sure you do not lose all your money right away?
Spreading your investments is important
It is especially important to spread your investments sufficiently. Do not put all your money on one share. For example, many novice investors put all their money into bitcoin. This is tremendously risky. By spreading your money across different investment products like shares and bonds, you are already reducing the risk. Subsequently, it is wise to invest in companies from different sectors to improve your results even further.
Many beginners are not careful. For example, they immediately put all their money into one investment. Other beginner investors invest money they cannot really miss. This can lead to negative emotions that adversely affect your investments. It is therefore important to start with caution. Start with a small amount of 1000 or if necessary 100 and first develop a feel for the market.
Limit your costs
Many beginner investors underestimate the importance of costs. When you invest with an expensive party, your chances of success are much lower. Opening an investment account at the bank is therefore rarely a good idea. A cost difference of half a percent can cost tens of thousands of euros over a long period of time.
Are you curious where you can invest cheaply? In this article we reveal the cheapest brokers to invest with:
Invest in things you understand
Some beginners make the mistake of investing in products they do not yet fully understand. However, this is very risky. If you do not know what you are doing, chances are you are losing money. Therefore, spend enough time to gain an understanding of the investment product you want to invest in. That way you avoid losing a large part of your money due to a lack of knowledge.
14 more investing tips?
Do you want to get off to a flying start as a novice investor? We have written an article with 14 golden tips for the starting investor. Use the button below and find out how you can greatly improve your results!
How does investing work?
The starting point of investing is actually quite simple: you buy or sell something to buy or sell later with the aim of achieving profit. In recent years, thanks to the introduction of various online brokers, it has been possible to take advantage of both rising and falling markets.
For example, if you think that BMW's share price is going to fall, because German consumer confidence has fallen sharply, you may decide to sell BMW shares. We also call this shorting. When you open a short position, you earn money as soon as the price drops.
The great thing is that you can make money regardless of the direction of the market. With this new way of investing you only have to decide whether you want to buy or sell and at what time. When you open a position, the winnings or losses are tracked in real time and as soon as you close the position again, these winnings or losses will be definitively settled with your balance.
In the previous paragraph, we had already pointed out that certain news events may influence the prices of, for example, shares and currency pairs. It is also possible to invest by recognizing patterns in the price charts. For this you need some insight and through practice you can quickly become better at recognizing these patterns. Many people who start investing learn to recognize these patterns quickly and know when it is a good time to open a position.
In the end, investing is the (combined) game of supply and demand where a trend reversal means a shift in these ratios. For example, a price can fall quickly and rise again at a low value. At the lower price, new buyers can be found again.
Even without complicated technical analyses, patterns often can be identified easily. Horizontal lines through which the price rarely breaks can be found at any period. By buying and selling at these points, you can greatly improve your investment results.
Do you want to learn to invest better? We have developed a course in which you learn the basics of technical analysis. With this comprehensive tutorial you can start investing in shares! Use the button below to open the course.
Investing is fun, exciting and potentially profitable. As a beginner investor, you will have to get used to some terms, but do not be put off by this. Once you have made some investments with a broker, you will quickly become more experienced. Everyone was a beginner once, the question is when you are ready to start investing?
Try trading risk free?
How to invest safely in Bitcoin?
It is a well-known fact that Bitcoins can be hacked, and there is also a high chance that the value of the cryptocurrency may suddenly drop, leading to a significant loss of funds. In this article, we will discuss how to best manage these risks when investing in Bitcoin.
Steps to invest safely in Bitcoin
- Step 1: Ensure that you open an account with a reputable exchange:
|Trade in popular cryptos with a free demo & start today. Cryptoasset are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply.|
|Speculate on increasing & decreasing crypto prices with the CFD provider Plus500 using a demo account. 82% of retail CFD accounts lose money.|
- Step 2: Secure your account with a strong password and 2FA
- Step 3: Transfer your Bitcoins to a cold wallet
- Step 4: Do not invest all your money in Bitcoins at once
Use a Reliable Platform
There are many scammers active in the crypto world, and many unsuspecting investors are lured in with promises of massive returns. Therefore, it is important to ensure that the platform you are dealing with is trustworthy. You can, for example, verify the broker’s registrations to ensure that the Bitcoins you buy are actually credited to your account.
Secure Your Account
It is recommended that you secure the account you use to purchase Bitcoins. Choose a strong password and use 2FA security.
With 2FA, you add an extra layer of security: you can only log in after entering a confirmation code on your mobile device. You can easily enable 2FA or Two-Factor Authentication within your Bitvavo account under settings.
Furthermore, be careful with emails that come from your crypto broker. Hackers sometimes engage in phishing: they try to steal your information, so they can hack into your account. By setting an Anti-Phishing code, you can ensure that the emails you receive are from your crypto exchange.
Diversify Your Investments
When investing large amounts, it can be wise to use multiple brokers. If one exchange fails, you can quickly switch to another exchange.
Just like with stock investments, it is also advisable to invest in different types of cryptocurrencies. This prevents you from losing your entire investment if Bitcoin suddenly fails. Therefore, research which cryptocurrencies you can invest in and diversify your opportunities.
It is also advisable to spread your Bitcoin investments over time. This way, you prevent investing your entire amount at the top of the market. By investing at different times, you apply dollar cost averaging and achieve an average return on the Bitcoin market which is much safer!
Use an Offline Wallet
It may also be wise to move some of your Bitcoins to an offline wallet. An offline wallet is also called a cold wallet and is not connected to the internet. This prevents hackers from easily accessing your Bitcoins.
However, it is important to remember your access keys. If you lose them, you will never be able to access your Bitcoins again. You will not be the first investor to lose a fortune in Bitcoins.
You can easily send Bitcoins from your crypto exchange account to an (offline) wallet. Keep in mind that there are costs associated with sending Bitcoins to a new wallet address since miners need to be compensated. Therefore, it is advisable to only send larger amounts of Bitcoins.
Beware of Scams
There are many scams when it comes to Bitcoin and other cryptocurrencies. If you want to invest safely, it is essential to learn how to recognize them.
For example, there are many ICOs (Initial Coin Offerings) where new coins without any value are sold at a high price. Because Bitcoin is a big hype, many people still decide to sign up. However, if there is no value behind the cryptocurrency, you will quickly see that the value can plummet.
Furthermore, be careful of pump and dump schemes. In a pump and dump scheme, a small group buys a certain cryptocurrency massively. The price can then rise sharply, after which more people decide to buy the coin. When the price has increased sufficiently, the initiators of the scheme sell the coin, after which the price collapses. Read more about pump and dump schemes here.
There are plenty of Bitcoin scams: therefore, be aware of the dangers when investing in Bitcoin and secure your investment!
Bitcoin security and privacy
Bitcoins have the image of being private: transactions are said to be difficult to trace. At a certain level, this is true, but you are not completely anonymous. Depending on what you do with the Bitcoins, your security can be at risk.
Bitcoin transactions are connected to a hash code, a unique identification code. When parties know which hash code is connected to you, they can also follow your transactions. However, a supercomputer is needed to download all transactions. Do you want to send transactions anonymously?
Conclusion: How safe is Bitcoin really?
Bitcoin as a means of payment is safe: due to the high level of cryptography and the validation of transactions by miners, data cannot be easily modified. In addition, all transactions are public, which makes it difficult to cheat within the system.
This does not mean that there are no risks involved when investing in Bitcoin. Hackers are always on the lookout, and the value of Bitcoin can plummet. Moreover, always remember your password: if you forget the login details of your account, no one can help you.
It is certainly possible to invest more safely in Bitcoin. However, it is important to take sufficient precautions. Just like with your bank account, it is also critical to ensure the security of your Bitcoin account. Furthermore, please remember that Bitcoin is highly volatile, and you may suddenly lose a large amount with a failed investment.
How to invest in the S&P 500?
You can invest in an individual stock, but you can also choose to invest in an index. One of the most well-known and popular indices in the world is the S&P index, which is also known as the S&P 500 index. In this article you read everything you need to know to start investing in the S&P 500!
What is the S&P 500 index?
The S&P index is also called the S&P 500 index or simply the S&P. This is a U.S. stock index consists of the 500 largest companies in the United States (measured by market capitalization). By investing in the S&P index, you essentially invest in a “basket” of stocks. You do not invest in an individual stock, but rather in all the stocks that are part of the index.
Where can you invest in the S&P 500?
Do you want to invest in the S&P 500 yourself? You can use one of these methods!
Option 1: Buy an ETF
You can buy an ETF in the S&P index. You then buy a share in a fund that tracks the price one-to-one. Buying ETFs is recommended when you focus on building wealth. With most ETFs, you pay low management fees, which makes it a good way to invest in U.S. stocks.
Are you curious about which brokers are the best for buying S&P 500 ETFs? It is recommended to choose an affordable broker, to limit the amount you spend on transaction fees. You can invest in the S&P 500 with one of these reliable brokers:
|Buy without commissions. Your capital is at risk. Other fees may apply.|
|Speculate with CFD's on increasing & decreasing prices of ! 82% of retail CFD accounts lose money.|
|Benefit from low fees, an innovative platform & high security!|
|Speculate on price increases and decreases of with a free demo!|
You can invest in the following S&P 500 ETFs:
- Vanguard S&P 500 UCITS ETF (IE00B3XXRP09) with 0.07% costs
- iShares Core S&P 500 ETF (IE00B5BMR087) with 0.07% costs
In this article, you can read in more detail why these are the best ETFs to invest in the S&P 500.
Option 2: Buy S&P 500 shares yourself
You can also decide to buy the stocks in the S&P 500 yourself. The S&P 500 contains 500 stocks: therefore, you need quite a bit of capital to buy all the stocks in the index. It is therefore more practical to make a selection and only invest in a few stocks from the index.
When you invest in many stocks, it’s important to select a broker that doesn’t charge fixed commissions. Are you curious about which brokers offer low rates for investing in stocks? Have a look at our overview of the best brokers:
Option 3: Speculating with a CFD
Do you want to invest in price changes on the S&P index? Then sign up with an online broker that offers this index in its investment offerings. An example of a good broker that allows trading in the CFD of the S&P index is eToro. With a CFD, you can take advantage of short-term fluctuations in the index.
Use the button below to open a free demo account with eToro right away:
Option 4: Futures on the S&P 500
Futures are derivatives that allow you to speculate on the price movements of the S&P 500. For most investors, it’s not recommended to use futures: your losses can quickly add up, and you need a large amount of capital to invest in futures.
How to start your first investment in the S&P 500?
Have you decided that you want to invest in (stocks of) the S&P 500? Then follow these steps to achieve better results!
Step 1: Open an account with a broker
You first require an account with a broker to start investing. Opening an account with a broker is easy: you only need to enter an email address and password at the beginning. Before you can really start investing, you need to verify your account. You do this by submitting a copy of your passport and proof of your address.
Are you still undecided between different brokers? Click here to compare the different options.
Step 2: Deposit money into your account
You can start investing in S&P 500 stocks with most brokers with as little as $100. You can often easily deposit money into your account by using a credit card or iDEAL.
Step 3: Choose an S&P 500 ETF
Then choose from the different S&P 500 ETFs in which you can invest. Most S&P 500 ETFs are comparable to each other. You typically pay around 0.07% in management fees, which is extremely low. Additionally, at some brokers, you don’t pay commissions for buying and selling S&P 500 ETFs or stocks. In this article, you can read in more detail what the best choices are.
Step 4: Place an order
Once you have a broker account and know which S&P 500 ETF you want to invest in, you can place an order. You can specify the amount you would like to invest in the S&P 500.
When placing an order, you can choose from two types of orders:
- Market order: you buy the S&P 500 ETF or stock directly at the prevailing price.
- Limit order: you buy the S&P 500 ETF or stock at a specified price.
For most S&P 500 investors, a market order is sufficient. You then invest a fixed amount monthly for the long term. Limit orders are mainly attractive for speculators who want to take advantage of short-term price fluctuations.
What are the advantages of investing in the S&P 500?
- Diversification: by investing in the S&P 500, you can spread your risks over more than 500 companies. This reduces the volatility of your investment.
- Transparency: it’s 100% clear what you’re investing in with the S&P 500, as you can easily find the companies included in this index.
- Time-saving: you save a lot of time by investing in the S&P 500, as you don’t have to select individual stocks yourself.
- Low costs: investing in the S&P 500 is relatively inexpensive, with management fees not exceeding 0.07%.
What are the disadvantages of investing in the S&P 500?
- No influence: you can’t decide which stocks to buy or sell yourself.
- Limited diversification: you only invest in companies listed on the American stock exchange.
- Limited return: you won’t make a massive profit quickly with an investment in the S&P 500: stability is the key word.
- Losses: you can lose money with investments, especially in the short term. This also applies to the S&P 500.
The history of the S&P index
The S&P index was published in 1957. The party behind the index is credit rating agency Standard & Poor’s.
The history of the S&P index does not begin in 1957, but actually long before that. Credit rating agency Standard & Poors started keeping track of an index as early as 1923. In the first years of the index, around 230 companies were involved. When exactly 500 companies were connected to the index in 1957, the S&P was established.
Until 1988, the number of companies included in the index per sector was always fixed. This is no longer the case now. Because companies per sector are no longer fixed, the index can respond more quickly to the changing market. Companies are added and removed more rapidly. This flexibility has made the index very popular recently. Today, there are approximately 90 sectors represented in the index.
Development of the S&P 500 over the years
Price movements of the S&P 500
The S&P 500 has performed very well in the recent period. In 1982, the price was just above $100, and at the time of writing, the price is above $4,400. If you had invested in the S&P 500 over the past period, you would have achieved excellent results.
Are you curious how your wealth can grow if you invest periodically in the S&P 500? With this handy tool, you can immediately see what results you can achieve.
Dtermine a good entry point
Most people invest in the S&P 500 to achieve an average, stable return. Active investors, also known as day traders, try to time the market, however. If you enter at the right time, you can achieve an above-average return on your investments.
It is useful to invest a larger amount during times of crisis. For example, I invested more money after the coronavirus crisis, when prices fell sharply. You can treat such moments as a “discount”. However, you do need patience and nerves of steel, as losses during these times can be significant.
You can also analyse individual stocks from the S&P 500. If you manage to only select the winners, you can beat the index and achieve a better return. Research whether the company has a good vision for the future. You can also look at the relationship between the stock price and earnings.
Do you find it difficult to determine a good entry point? Then dollar cost averaging can be a smart strategy: you invest periodically (for example, monthly) with a fixed amount. This way, timing is not essential, and you invest at both favourable and unfavourable moments.
The composition of the S&P index
The S&P index is a so-called market value-weighted index. When a company is added to the index, the market value of the organization is always considered. The market value of the company determines the weighting the organization has in the S&P index. This means that the company with the largest market value or market capitalization has the largest weighting in the S&P index.
Large companies in the S&P index currently include Apple, Alphabet (Google), Microsoft, ExxonMobil, Amazon, Johnson & Johnson, Facebook, Berkshire Hathaway (Warren Buffett’s company), General Electric and AT&T Inc.
Does the S&P 500 provide a reliable overview of the American economy?
The S&P 500 contains 500 American companies: this makes the S&P 500 a reliable representation of the performance of American stocks. Even the most valuable company, Apple, has only a limited weight within the index. This allows you to accurately determine how the stock market performs in America.
The S&P 500 is also very popular among analysts: within the index, you will find no less than 90 different sectors, which provides a comprehensive picture of the economic situation within America. This is not the case with the Nasdaq, which includes only a limited number of sectors.
Watch the weight of each company
When investing in the S&P 500, it is important to remember that the weight of stocks has an important influence on the price. The largest stocks sometimes count ten times as heavily as the smallest stocks. As a result, a price change of the top 10 companies has a relatively large impact on the S&P 500 index.
What are circuit breakers?
Circuit breakers were introduced on the S&P 500 index in 1987. This decision was made on Black Monday when the stock market fell by as much as 23% in a short time. When prices fall by 7%, 13%, and 20%, trading is suspended for fifteen minutes. The break allows investors to analyse the situation. This system should prevent the initial panic reaction, which makes the stock market less likely to collapse in the event of bad news.
What are the requirements for a company to be included in the S&P 500?
- The company must have a US stock listing.
- The headquarters must be located in America.
- The market value must be at least $5.2 billion.
- At least 250,000 shares must be issued.
- 50% of the shares must be freely tradeable.
- The liquidity and financial health is sufficient.
- Positive profit figures over the last 4 quarters.
- The company may not be a fund or separate holding.
When will the index be reweighted?
The weighting of the S&P index is reevaluated at four quarterly points: March, June, September, and December. Stocks that no longer meet the criteria do not need to be removed from the index immediately to guarantee the stability of the index.
Rebalancing can greatly influence stock prices, since all funds based on the S&P 500 will buy and sell the relevant stocks.
Consider Other Factors
The index can be influenced by acquisitions, spinoffs, restructuring, and dividend payouts.
S&P 500 EWI
Since 2003, the S&P 500 EWI or Equal Weight Index also exists. Within this index, all companies have an equal weight of 0.2%, which allows for a higher level of diversification. This option may be interesting if you want a higher degree of diversification, but it also means that smaller companies can have a greater impact on the index’s price movements.
FAQs about the S&P 500
What is a short squeeze? Profit from shorters!In 2021, Gamestop was without a doubt the most well-known short squeeze. In this article, we discuss what a short squeeze is and how it takes place. After reading this article, you will know what a short squeeze means and how to profit from it.
Do you want to profit from a short squeeze yourself?
What is shorting?A short squeeze can only occur when many people short a stock. You go short on a stock when you speculate on a decreasing price. You then sell shares that you do not own, hoping to buy them back at a lower price later on.If you want to read more details about shorting, you can read this article:
What is a short squeeze?When you open a short position, you borrow shares from another party. At some point, you will have to buy back these shares. Shorters hope to buy these shares at a lower price.However, this does not always work out; the price can also rise. When many people own short positions, this can lead to a domino effect. A positive news article can give a boost to the stock price, after which shorters begin to close their positions. A short position is closed by buying the shares, which further increases demand for the stock.With a short squeeze, the shorters are squeezed like a lemon: the stock price can suddenly rise sharply.
The 6 steps of a short squeeze
- A company does not perform well, which leads to many people shorting it.
- The company reports better-than-expected results, causing the price to rise.
- Some shorters panic and close their positions, forcing them to buy the stock.
- This creates a chain reaction causing more investors to close their short positions.
- Due to the large increase in demand for the stock, the price rises explosively.
- The short squeeze is a fact, the rocket goes up, but often crashes back down quickly.
Gamestop: A well-known example of a short squeezePerhaps the most well-known example of a short squeeze occurred in 2021. The Gamestop stock rose from a few dollars to over 300 dollars.Gamestop is a simple physical gaming store, not the type of modern company that attracts substantial stock price increases. However, at one point, there were more short positions than Gamestop shares, which makes the likelihood of a short squeeze very high.A large group of retail investors on Reddit noticed this and decided to buy the stock massively. As a result, the stock price skyrocketed to enormous heights within a week, and a group of “ordinary people” defeated several large hedge funds.
How to benefit from a short squeeze?As an investor, you can benefit from a short squeeze. It is essential to find shares with a high chance of a short squeeze:
- Stocks with a low market capitalization (i.e., a low total value) have a greater chance of a short squeeze (<$1 billion)
- Stocks with a good news expectation. The good news then gives the initial boost to the stock price.
- Stocks with relatively high short positions compared to the number of available shares have a greater chance of a short squeeze.
What is the biggest short squeeze?The biggest short squeeze ever occurred on Volkswagen/Porsche shares in 2008. This story demonstrates the power of a short squeeze, as the company was temporarily the largest in the world.In 2018, the company’s stock initially dropped significantly, almost 50%. This attracted many shorters, as you can make money with a short position when the stock price falls. However, Porsche announced that they bought a large part of the company, causing shorters to close their positions. In an acquisition, you often see a significant increase in stock price, since a premium above the asking price is paid.This led to a massive chain reaction, causing the stock price to increase fivefold within a few days!
What are the risks of a short squeeze?Short squeezes are not entirely without risk. Short squeezes don’t always occur; if the stock price continues to drop, you can lose money on your investment position.Even investors who enter at the right time frequently still lose money in a short squeeze. They are greedy and do not exit in time. A short squeeze is always temporary by definition: it typically only lasts a few days. This was also the case with Gamestop: after the peak of $300 was reached, the stock price fell back to $40.
How can you protect yourself against a short squeeze?When you open a short position yourself, you can encounter a short squeeze. Your loss can then be enormous: when the stock price increases several times, you can lose the entire amount in your investment account.It is therefore advisable to always use a stop loss. With a stop loss, you set an amount at which you automatically take your loss. However, a stop loss cannot always be executed in fast-moving markets. With some brokers, you can use a guaranteed stop loss, which is attractive when you expect a lot of volatility.
What is a gamma squeeze?Options played an important role in the strong price development of Gamestop. When you buy options, the counterparty is at risk when they do so without owning the collateral. A naked call can become costly, especially when the price rises sharply.The counterparty can also be moved to buy more shares when many call options are taken. This can increase the chance of a significant increase in stock price for investors who buy options, which is also called a gamma squeeze.
How to invest in NASDAQ (2023)? – NASDAQ stocks & ETF’sDo you want to invest in the NASDAQ? The NASDAQ is known as America’s technology index! Investments in the NASDAQ can pay off well. In this article, we will look at how and where you can buy the best NASDAQ stocks.
How to Invest in the NASDAQ Index?
Investing in the NASDAQ with an ETFYou can choose to invest directly in the NASDAQ index by investing in the NASDAQ Composite index, which contains the 100 largest companies listed on the NASDAQ.The NASDAQ index is very popular among investors. This popularity is caused by the solid profit figures generated by the technology companies that belong to the NASDAQ stock exchange. Moreover, if the companies on the exchange perform well, you will achieve good results.You can invest directly in the NASDAQ with the help of an ETF. An ETF is an index fund that tries to track the index as precisely as possible. When you invest a regular amount in an ETF on the NASDAQ, you can benefit from the long-term price developments. In the overview below, you can see directly at which brokers you can trade in NASDAQ ETFs:
|Buy without commissions. Your capital is at risk. Other fees may apply.|
|Speculate with CFD's on increasing & decreasing prices of ! 82% of retail CFD accounts lose money.|
|Benefit from low fees, an innovative platform & high security!|
|Speculate on price increases and decreases of with a free demo!|
- iShares NASDA 100 UCITS with 0.33% management fees
- Investco EQQQ NASDAQ-100 UCITS with 0.3% management fees
Actively Speculating on the NASDAQ Price TrendYou can actively speculate on the price trend of the NASDAQ: this is also called day trading. Speculation often happens through a derivative, which makes it possible to:
- Speculate on rising and falling NASDAQ prices
- Use leverage to speculate with a larger amount of money
How to Buy NASDAQ Stocks?You can also choose to invest in individual stocks listed on the NASDAQ. It is important to conduct sufficient research as stock market prices can quickly rise and fall.When selecting NASDAQ shares, you can pay attention to the following factors:
- What is the stock trading at in terms of price-to-earnings ratio?
- Does the company have a good plan for the future?
- Does the company face any competition?
- What is the economic climate like?
What are the Benefits of Investing in the NASDAQ?
- Diversification: when you invest in the NASDAQ, you apply a higher level of risk diversification than when you buy individual stocks.
- Costs: investing in an index is relatively inexpensive, since you pay low annual management fees on your investments.
- Innovation: companies within the NASDAQ are above average innovative. As a result, you can achieve a higher return in the long run.
- Effortless: you can invest regularly without any effort. All you have to do is deposit a monthly amount of money.
What are the Disadvantages of Investing in the NASDAQ?
- Limited Diversification: with the NASDAQ, you do not invest in all sectors, which means the diversification is not perfect.
- Control: when you invest in the NASDAQ, you have no control over your individual investments.
- Dollar: the exchange rate of the dollar has a significant impact on your final result.
How Do You Buy a NASDAQ ETF?Before you can buy a NASDAQ ETF, you need to open an account with a broker. You also need to deposit enough money into your account to buy at least one NASDAQ ETF. In this short instruction, we will show you how to buy a NASDAQ ETF with eTroro.In the search bar, you can enter NASDAQ. Then select the NASDAQ ETF you want to buy and click on the green TRADE button.In the order screen, you can fill in the most important details. This includes the amount you would like to invest and the type of order you intend to use. With a market order, you buy the NASDAQ ETF directly at the available price, and with a limit order, you specify a specific price at which you want to buy the ETF.
What is the NASDAQ stock exchange?The abbreviation NASDAQ stands for National Association of Securities Dealers Automated Quotations. This is quite a mouthful, which is why everyone actually refers to it as NASDAQ or US Tech 100.NASDAQ is an American stock exchange which is known for its technology stocks. The exchange has been in existence since 1967 and has lower admission requirements than many other American stock exchanges. This is why many new companies have their IPO on NASDAQ.Most stocks listed on the NASDAQ, are technology stocks. However, the stock offering becomes more extensive: within NASDAQ, you can also find many companies active in biotechnology.
What is the NASDAQ index?The NASDAQ index is an index based on the NASDAQ stock exchange. Its goal is to track the price development of NASDAQ as closely as possible.The NASDAQ-100 index is the most well-known index. This index only contains the largest 100 funds listed on the index. You can invest in this index yourself by using ETFs.There are no financial stocks included in the NASDAQ Composite index. The financial stocks are included in a separate index, namely the Nasdaq Financial-100.
Price development of NASDAQThe value of NASDAQ has declined by more than 80% in the past: this happened after the terrorist attack on the World Trade Center and the bursting of the dot-com bubble. The credit crisis also caused a sharp decline in the NASDAQ price.Despite these significant drops in the past, NASDAQ has shown a significant long-term increase. In 1995, the value of the index was approximately $450, while at the end of 2021, it was over $16,000! If you had invested regularly, NASDAQ would have given you a solid return.Do you want to calculate how much wealth you can build by investing regularly? Then try this tool!
Which stocks can you invest in on the NASDAQ stock exchange?You may be wondering which stocks are listed on the NASDAQ. Well-known companies listed on NASDAQ include:
What is the current price of the NASDAQ?Are you curious about the price development of NASDAQ? In the chart below, you can see at what price you can directly buy or sell a CFD on NASDAQ.
Limited diversification within the indexMany people believe that investing in NASDAQ provides a solid level of diversification. For most people, it is certainly true that an investment in NASDAQ is more stable than randomly buying stocks. However, it is important to investigate the content of the instrument in which you invest in NASDAQ.For example, within NASDAQ 100, you can see that the three largest stocks comprise a large part of the index. Apple, Amazon, and Microsoft account for more than 30 percent of the value of the index. If you add Facebook, Alphabet, and Tesla to the list, you already have half of the index, which means your level of risk diversification will often be disappointing when you invest in NASDAQ. If these stocks do not perform well, the return on your investment will almost certainly disappoint.It is therefore critical to investigate which shares are included in an index. Determine the weight of individual stocks: this allows you to determine whether the index helps you achieve good risk diversification. If certain stocks maintain a dominant position, it is important to investigate those companies.
Is it wise to invest in NASDAQ?Whether it is wise to invest in NASDAQ is always a personal consideration. I see NASDAQ as the index of the future. The companies that are doing well today (companies like Apple and Amazon) are all technology companies. Within NASDAQ, you can find many other innovative companies that develop new technologies such as 3D printing or electric driving.However, you need a lot of patience. You can see that the prices of innovative companies often move more strongly, both up and down. A large part of the companies on NASDAQ will probably not survive, but these losses can be offset by the enormous profits of a few successes.By investing in NASDAQ for the long term, you can benefit from these new technologies. Of course, if you manage to find that one successful company, you can achieve an even higher return. However, the chances of this are small, and by investing in an index, you decrease your investing risk.
How can you practice investing?By practising investing, you can get off to a successful start once you start trading with real money. These days, you can easily practise investing by opening a demo account with an online broker. At most brokers, you can try out investing for an unlimited period. But how does this work exactly?
How can you practice investing?
Practising trading is possible with eToro’s trading software. With this software, it is possible to open CFD-positions on all popular shares, but also on for example the S&P500 or the commodity gold. Due to the large availability of trading options, you can practice with the various securities and respond to price changes on each security.Would you like to practice buying & selling shares? At eToro, you can buy & sell all stocks without paying any commission. This makes this broker also suitable for investors who want to invest with a small deposit. By using their demo, you can try the possibilities directly without risk. Use the button to open a practice account directly at eToro: Do you want to practice active trading at Plus500? You can do so by opening a free demo at no risk. Use the button below to directly open a trading account at Plus500: By practising you will discover what works and what does not. Before you start, we would like to give you some tips that can help you to be successful. Everyone makes mistakes in the beginning, but by applying these tips, you’ll reduce the chance of making them enormously!
Why practice trading?
By practising investing, you gain practical experience immediately. The prices within a demo correspond to the prices in reality. The results you achieve by practising are therefore comparable to the results you would achieve in real life. By practising online, you can therefore get a good idea of how you would do in real life.By practising investing, you can get off to a more successful start. You get to know the markets and discover what is possible within the software. This allows you to try out all kinds of strategies and tactics, and you will find out what works for you.Ultimately, the goal of investing is to make a profit. If you want to increase your chances of success, you can carry out extensive analyses. The best-known two analyses you can perform are:
- Technical analysis: analysing patterns on the chart.
- Fundamental analysis: looking at the numbers behind the company.
What are the advantages of practising investing?I always advise new investors to practice investing first. You can do this with a free demo account at a broker, but you can also choose to keep track of your virtual positions on paper.By investing with a practice account, you can experiment with the different investment products. That way, you develop a better feeling for the different investment options, and you learn how to use charts to make good analyses.Because you are not risking any money with a practice account, you can try out various decisions. That way you can learn how best to deal with strong price fluctuations. Opening practice accounts at different brokers is also a great way to try out different brokers and software programmes.
What are the disadvantages of a practice account?However, there are also disadvantages to using a practice account. Some investors get rich too quickly: they press some random buttons and within the demo software they immediately make a return of tens of percent’s. Of course, gambling is not an investment strategy: therefore, make your investment decisions as if you were investing with real money.Nor does a practice account prepare you directly for the ‘harsh reality’. The feelings of fear, hope and greed are often absent because you are investing with fake money. When you switch to real money, it can suddenly be a lot more difficult to invest rationally. It is therefore important to build up investing with real money slowly: for example, first deposit a small amount of money.After all, it is important to pay attention to the conditions of the demo account. When you practice at a broker, you’ll often receive a hefty sum of money. At Plus500, for example, you trade with a $40,000 demo account. With a large amount, it’s easier to spread your risks, allowing you to apply a better trading strategy. Therefore, it is wise to really apply the same strategy to your trading demo as you would in real life.
How do you get the best results with a practice account?What you get out of a training account depends largely on you. You may press buttons like crazy and learn very little. If this is your strategy, you are likely to get disappointing results with a real account.It is better to take practising seriously. Before you start practising, draw up a plan: when will you open an investment and for what reason? With a practice account, you can then test and optimize your strategy. It is important to critically examine the investment decisions you make: where you greedy, for example? Did you not follow the rule properly? Or is the strategy not working?By constantly evaluating your decisions, you can develop a strategy that you can implement with real money. Even after you start investing real money, it is important to keep evaluating your results. This way you will achieve the best results.
Get off to a successful start with a few tips
- Always use a stop loss: limit your losses that way!
- Ensure a favourable risk/return ratio.
- Do not risk more than a few per cent on any one position.
- Do not invest all your savings: build it up slowly and get used to trading.
- Do not open positions at random: apply a strategy.
- Successful investors take their losses: close losing positions!
From practising to real moneyWhen you have practised enough, you can start trading with real money. The transition from trading with demo money to real money can sometimes be a big one. Losses hit you a lot harder when it’s your money. Some investors panic and lose their deposit immediately.It is therefore wise when you start out to determine your goals in advance and not to simply adjust things like the stop loss and take profit afterwards. You only adjust them when it fits in your strategy and not because you are afraid to lose. The best investors, always invest according to a plan.
How long do you have to practise investing?There is no fixed answer to this question. Not every investor needs the same amount of practice time. Some people have a stronger talent than others. Yet, it is a fact that everyone needs practice becoming better. After all, you are not born as a stock guru.In any case, it is important to remain humble. Accept that you were not born perfect and always look for ways to improve your investment strategy. It never hurts to test new strategies extensively. Only put money into strategies that have already proven themselves.
Investing on a small budgetMany people mistakenly think that investing is only suitable for people with large amounts of money. However, this is by no means the case: even on a small budget you can achieve a good investment result. By investing regularly with a small deposit, you are slowly working towards a bigger sum of money. For example, with an investment of $ 85 per month, after 20 years you already own $ 38,730 at a return of 6%, while you have only invested € 20,400. In this article we will discuss how you can best invest with a small budget.
How can you invest with a small deposit?
Nowadays, there are different ways to invest with a small budget. For example, you can choose to actively speculate. You can also trade stocks against low transaction costs or buy ETFs. In this section of the article we will discuss the best way to invest on a small budget.
Option 1: buying shares on a small budgetWould you rather invest for the long term? In that case, you can choose to buy one or more shares. Nowadays, you can also buy shares with a small deposit. This was not attractive in the past: you paid a minimum amount of transaction costs, which meant that you could not actually make a profit with a small investment.If you always have to pay at least $2 in costs on your stock transaction, this is already more than 2% on an investment of $100. At an average annual return of 6% this is of course not a very attractive option. If you are going to invest on a small budget, it is therefore even more important to choose an inexpensive broker.An example of an inexpensive broker is eToro. With eToro, you do not pay any fixed commissions, which means that it does not matter whether you buy $100, $1000 or $10,000 worth of shares. This makes it possible to invest in shares with any budget. Use the button below to open an account with eToro:
Option 2: speculating on the stock marketYou can choose to actively speculate on the stock market using CFDs. With CFDs, you can trade the price of stocks in the short term. You can trade as little as $100 in CFDs: by using leverage, you can also take a large position with a small deposit. A good party where you can actively speculate on the stock market with a small budget is Plus500. Use the button below to instantly open a free demo account with Plus500:
Example speculating with small budgetLet us put forward a calculation example. When you deposit $100 into a broker account of a broker like Plus500 then you can use a leverage of 1 to 5.You are watching TV and on the new you hear that Philips has a sales success thanks to the launch of a new television. On the basis of this news item, you expect Philips’ stock price to rise, but there is only $100 in your account.The stock price in this example is $20, so with $100 you would normally only be able to buy 5 shares. However, thanks to the presence of a leverage ratio of one to five, you can buy CFD shares for $500, which means you can buy a total of 25 shares.Investing with a small deposit is therefore certainly possible. However, it is important to emphasize that with a leverage, your results move faster. When the price falls by 10 cents, you immediately lose 25 times 10 cents. Fortunately, you can never lose more than you deposited into your account.
Option 3: Investing in ETFs with a small marginA final attractive investment option is to buy ETFs. An ETF is a fund that is traded on the stock exchange. Normally, an ETF follows a basket of investment products; these can be, for example, shares in a particular index. With an investment in an ETF, you can therefore easily track entire markets.Investing in ETFs is ideal for investors who have little time and would still like to see their assets grow. You will not make a huge profit quickly, but in the long term your assets can grow well. This is certainly the case if you invest in ETFs on a staggered basis: in this way you avoid losing all your money by investing at the top of the market.With a small budget, it is of course even more important to invest at low costs: DEGIRO is the ideal option for this. With DEGIRO, you don’t pay any buying and selling costs when you buy ETF funds from the core selection. Use the button below to directly open an account with DEGIRO:
What should you pay attention to when investing with a small budget?
When investing with a small budget, it is especially important to stay sharp. By taking the wrong decision, you can lose a large amount of money quickly. In this part of the article we look at what to pay attention to when investing with a small budget.
Pay attention to the costsEvery investor should pay attention to costs. However, investors with a small budget should pay EXTRA attention to costs. If you can choose between a broker where you pay $2 or $6 in transaction costs, your budget plays an important role:
- When you invest $100 you pay 2 or 6 percent in transaction costs.
- When you invest $10,000, you pay 0.02 or 0.06 percent in transaction costs.
Risk diversification is always importantSome investors invest all their money directly in one specific investment product. Many people did this during the Bitcoin hype of 2018 by investing all their money in bitcoins. This is very risky: when the price of the bitcoin subsequently crashes you lose your entire investment. This is something you want to avoid as an investor, especially when you are on a small budget.It is therefore wise to spread your money across different investment products. When you spread your money over multiple investment products, you decrease the volatility of your investments, which makes your results fluctuate less. You can spread your investments over:
- Different investment products such as shares & bonds
- Different regions such as America and Africa
- Different sectors such as retail and banking
- Time: investing your money at different times
Patience & disciplinePatience and discipline are perhaps even more important for the investor with a small budget. When you invest millions of pounds, there is a lot of action: even an increase of one percent brings in large profits. Of course, this is not the case when you invest with a small deposit of $100. Even a 100% return only results in a profit of $100.It is therefore important to keep a long-term vision in mind. By investing with a small amount of money, you can build up a large capital in the long term. Many small investments can grow into a big one.For most investors it is therefore advisable not to log in too often to look at your trading positions. Try to ignore your emotions as much as possible and draw up a plan. By waiting patiently and by investing with discipline with a small budget, you will achieve the best results in the long term.
Beware of debtsNot investing is a problem: after all, by not investing, you can be sure that your assets are slowly dwindling. Nevertheless, it is also important not to get too excited about investing. Some people start investing while they still have substantial debts outstanding. If you have debts with a high-interest rate, it is better to pay them off first.It is also important to set aside enough money. Only invest with money that you can spare in the long term. Investing is not a certainty: it is therefore important to always put enough money aside.
Can you get rich from investing with a small budget?
It is certainly worth investing with a small budget! To accomplish this, you need to understand the difference between being rich and becoming rich. You are probably not rich yet, otherwise you would not have ended up on this page. However, this does not mean that you cannot become rich in the future. The best way to get rich is to set aside an amount periodically.When you draw up a realistic plan, you know what to expect. Remember that you will receive return on your return as well, which will certainly allow your money to grow exponentially in the long term. If you set aside $10 per month for 40 years at a return of 7%, this amount will grow to $24,855. If you do this with a small deposit of $75, then you even own $178,421. Investing with small amounts is therefore definitely worthwhile!
Does it make sense to work with small investors?
Absolutely! The number one factor that determines whether you are successful with investing is your time horizon. The stock market is unpredictable and can certainly move downwards for longer periods of time. As a result, you can lose a lot on your investments in the short term. However, if you periodically invest a small part of your investment budget, you increase the chance of achieving favourable results in the long term.
Getting started with a demo for freeWould you like to try investing in CFDs yourself with a small deposit? Well, you can! At most brokers you can quickly and easily open a demo account where you can trade with virtual money under real market conditions. As soon as you’re ready, you can start trading with a small deposit of $100 or more.Use the button below to directly open a free demo at a broker:
What is the best way to invest with 100 pounds?Investing with 100 pounds is possible! When you start investing with 100 pounds, that is a nice starting amount. But before you start, it is important to decide where you are going to invest. You can invest the 100 pounds in one go, but you can also invest in different shares to spread your chances. If you do not have any experience, you can first practice on the internet and then invest 100 pounds for real to try your luck.
What is the best way to invest 100 pounds?
With 100 pounds, you can achieve good results! It is important to select a smart investment method. Below we discuss the different ways you can invest 100 pounds.
Invest 100 pounds in sharesIt is also possible to invest in shares with 100 pounds. It is important to choose a broker where you pay low transaction costs. At many banks and brokers, you pay fixed transaction fees. For example, if you pay a 2 pound per order minimum, your costs quickly add up to 2%! That way it is exceedingly difficult to achieve a good return on your investment.For that reason, it is smart to invest with a broker without fixed commissions. At eToro you do not pay set commissions on any shares. This allows you to buy several shares, even with 100 pounds. Use the button below to open a free account with eToro:
Active investing with 100 poundsYou can choose to trade in the price development of a stock. You can then speculate on both price rises and price falls. In addition, you can take a larger position by using leverage with the 100-pound amount: You can then trade 500 pounds worth of shares.Did you know that you can try out the active trading of shares completely free & without risk? At Plus500, you can test trading of CFD shares with a demo. When you are ready, you can deposit 100 pounds and get started immediately. Use the button below to open an account directly with Plus500:
Invest 100 pounds a monthSome investors want to invest a monthly amount of 100 pounds. This is smart: The power of compounding allows you to quickly build up a decent amount of capital. Moreover, with 100 pounds you can spread your risks: you buy in both economically positive and negative times so that you never lose all your money at once.If you want to invest a fixed amount monthly, you can do this by investing in an investment fund or ETF. This fund invests your 100 pounds in a selection of shares. At the broker DEGIRO you can make an investment in many core funds for free. Use the button below to open an account with DEGIRO:
Why invest with 100 pounds?
There are several reasons why you would want to invest with 100 pounds. You can start saving money now, but how high are interest rates these days? The interest you receive from the banks is exceptionally low, which makes it more attractive to invest. Your money becomes less valuable long term which is of course not your goal.You can achieve a higher percentage by choosing to invest and if it works out well, you can get a good return on it. It is even possible to earn a living as a daytrader, every day. There are people who have stopped working and are only active as a day trader. However, it is important to remember that investing is a risky activity: There are certainly no guarantees!Achieving a return with 100 pounds is possible. You can use a lever with a modern CFD broker that can run up to 1:30. You can use leverage to take positions with a higher value than the amount you put into your account. This new way of trading has many advantages.
Successful with 100 pounds?
It is precisely this leverage that makes it so attractive to invest 100 pounds with a CFD broker like Plus500 or eToro. With 100 pounds, you can open positions with a total value of 3000 pounds or more, thanks to the leverage. With these brokers, the profit is determined by the price difference between the moment you open the position and the moment you close the position.If you buy 10 CFD Apple shares at a price of 600 pounds, and they rise to 630 pounds within 3 days, this difference will be your profit. However, please note that this works both directions: this profit can turn into a loss if you have made a wrong estimate. However, by using a stop loss you can ensure that your losses are limited as much as possible.
Investing in CFDsWhen you only have 100 pounds you can choose investing in CFDs(Contract for Difference). With CFD trading, you buy a contract on the price differences of the share. This means that you can obtain a positive result when the prices move. Since you can open a trading position on both increasing and decreasing stock prices, you can be active under different types of market conditions.You can easily try out the possibilities of investing in CFDs with a demo; that way, you do not even have to deposit money. When you are ready, you can immediately deposit 100 pounds into your account to invest in your favourite shares.The possibilities of investing are manifold: you can invest in stocks, but also the Forex, commodities, and index funds, and all this can be done within a single account.
Invest with 100 pounds?
Some people prefer to invest their 100 pounds. The difference with speculating is that investing is long-term. For example, you buy a share to sell it back a few years later. When you can invest a fixed amount of 100 pounds every month, investing can be very interesting.For example, if you want to invest a small amount of 100 pounds, it is wise to do so in an index fund. An index fund is a fund that tracks a bundle of stocks. The advantage of an index fund is that you can already apply a solid level of risk diversification, even with a small amount of money. You buy a stake in the fund and you become co-owner of, for example, 100 different shares. As a result, you are far less likely to lose a large amount of money with your investment.When you start investing 100 pounds, it is wise to deposit this amount with the fund in fixed intervals. By doing this, you make sure you also spread your risk over time. It is a shame to step in only when the markets have reached a new peak.Do you want to know where to buy shares in index funds? This can be done with an online broker. We have listed the best parties for you:
What is trading?Trading is one of the most profitable activities on the Internet. Every day, billions are earned and lost at the click of a mouse by people who trade online. As a trader, you trade in financial instruments such as stocks, currency pairs, and index funds. But why is trading so advantageous now, how do you do it, and what are the characteristics of trading? In this article you can read everything you need to know about trading!
How can you trade yourself?
Do you want to trade yourself? Then you need a free account with a broker. A broker is a party who, for example, makes it possible to buy and sell shares quickly. With most brokers, you can try online trading completely without risk by using a demo. Do you want to know where you can open a free demo? Click the button below and compare the different options:
What is trading?
Trading is a specific way of investing. You actively trade in, for example, a share. Trading differs from ‘traditional investing’:
- Investing: buying a share to achieve price gains in the long term.
- Trading: buying and selling a stock quickly.
Why is trading so lucrative?
- You do not need much money to start: $100 is enough to start!
- You can use orders and automate your trading activities.
- Successful trading does not have to take more than a few hours a week.
- Because you can go short, you can also place orders on falling prices.
- Thanks to the leverage, you can achieve results with a small amount.
- No commissions are charged: therefore, trading can be advantageous!
How can you make money trading?
Making money from trading is certainly possible. As you may know, the share prices, for example, are moving up and down every day. This movement is also called volatility and as a trader, you can benefit from these movements. You can place orders on rising and falling prices. The latter we also call going short. When you go short you predict that the price will fall, and you get a positive result when this eventually happens.Here are two broad strategies to choose from: intraday trading and day trading. When day trading, you keep an eye on the price developments and open multiple positions in one day. These positions can be kept open for a longer period. For people with less time, intraday trading is more attractive. When you do intraday trading, you open and close positions on the same day.
Learning to trade: become a good traderNowadays, anyone can trade online. Yet, very few people manage to become successful. If you want to become a good trader, you will have to apply a strategy. On the Internet you can find strategies that can help you to achieve better results.Of course, we would love to help you on your way! We have written a simple article in which you learn the basics of day trading. Press the button below to learn how to become a better trader:
In which securities can you trade?When you start trading, you can trade in different securities. Below is a small list of the different securities in which you can trade:
What is the best way to practice?
You must practice a lot! Trading is a skill you do not learn from books. Of course, you can learn aspects of trading, such as technical and fundamental analysis, from a book. However, only theoretical knowledge is not enough. Therefore, it is important to practice often. Try out different investment methods and see if you manage to achieve a positive result.Do you want to try online trading yourself? Then open an account with an online broker and try out the possibilities. We have listed the best parties for you:
How do you become a good trader?
After you have read this article, you will know exactly how to get started with online trading. But of course, just trading online is not enough: You also want to achieve good results. In this part of the article we look at what you need to consider when you want to make money from trading.
Follow the trendIn many industries, it works well to be opinionated. Artists make more money when they create something unique and as an entrepreneur, you better come up with an original plan. Unfortunately, when you start trading, this works a little differently!If you want to get a good result, it is wise to trade with the trend as much as possible. Creativity is therefore often not beneficial. Investors sometimes say the trend is your friend. By buying when prices are mainly rising and selling when prices are mainly falling, you greatly increase the chances of success.
Take a break on occasion
Similarly, boredom is not the trader’s enemy. It is better not to have a position at all than to lose a lot of money. When it is unclear where the market is going, it is better not to act.Even when there is a lot of uncertainty in the market, sometimes it is better to wait and see. For example, think of the Central Bank’s announcement of interest rates. Taking a position at such a time is more like gambling than trading.
Have a planThe best traders understand that they need a plan to deliver good results. First, determine the amount of money you want to trade with. This is your ‘corporate capital’. Based on this, you can determine the size of the positions you can take.If you want to act wisely, you set fixed percentages with which you trade. For example, risk no more than two to five percent of your total invested capital on a single trade. This will prevent you from losing the full amount in your trading account. When things go well, it is prudent to stop trading and evaluate your performance. Be critical of yourself and make sure you always trade profitably in the long run.
Do not get cockyEveryone seems to want to have an opinion about everything. Racial matters, the climate or the future of the European Union. Everyone is an expert these days. As a trader, it is better not to have an opinion.Do not act based on what you think is good or bad. The stock markets often anticipate good news or bad news. When good news is expected, people start buying shares. As soon as the news is presented, you see that many traders take their profits, which can cause the price to fall. So, it is not about your opinion, it is about the actions of large groups of traders.
Set simple rulesFinally, it is important to draw up simple rules. The most complex system is often not the best trading system. A good trader needs a lot of discipline. When you make the rules too complicated, it is a lot easier to (accidentally) deviate from them.Therefore, set some rules that determine whether you open a trade or not. Then evaluate these rules constantly and adjust where necessary.
Trading as a professionMany people encounter trading while they hold another job. They trade in addition to their profession. However, it is also possible to trade professionally within a company.Traders often earn a high salary. The average salary is around $600 per month with outliers to $7500 per month. In addition, traders have good working conditions and you can get high bonuses.These types of positions are often extremely popular. You must be good at maths and leave a fair number of competitors behind you. An example of a well-known company active in trading is Flowtraders.
FAQsIn this section we cover some frequently asked questions about trading. With this information, you can gain a better understanding of the meaning of trading.
What is a trader?
A trader is someone who actively trades on the market. Anyone can become a trader. To do so, you only need to open an account with an online broker. You can already start trading with an amount of $100.
What is day trading?
Day trading also means within the day. Many securities are traded within a session. For example, shares are traded during the opening hours of the stock exchange. Day traders try to take advantage of these fluctuations by taking one or more positions during this session. A Day trader will close his positions before the end of the trading session.
Is there such a thing as rapid trading?
In general, rapid trading exists. Traders often open multiple positions in one day. However, you can also trade long-term. This is what we call day intraday trading. In intraday trading, positions can sometimes be held for a few days to weeks. However, this is a lot faster than traditional investing. In traditional investments, shares are often held for many years.
Can you trade as a beginner?
Beginners can also start trading. Many brokers offer the option to try out the possibilities completely without risk with a demo. This allows you to make some serious mistakes before you make your first deposit. It is advisable to start with a small amount of money. With many brokers, you can start trading with a $100.
What is online trading?
All trading nowadays is done online. In the past, you had to call the bank to buy or sell shares. Fortunately, this changed. All you have to do is log into your account and you can quickly buy and sell shares.
What is Forex trading?
In Forex trading you only trade in currencies. For example, you speculate on an increase in the value of the euro against the dollar. Currencies often move fairly stable. As an active trader this allows you to predict the patterns well. This makes Forex trading more accessible for beginners. Do you want to learn more about investing in Forex? In our article about Forex trading you learn everything you need to know:
What is margin trading?
With some brokers you can do margin trading. When you trade on margin, the broker finances part of your investment. You can open a larger investment with a smaller amount of money. This allows you to get a higher return with your investment. At the same time, the risk is also a little higher. It is therefore important to be careful when you apply a margin. Would you like to know more about this way of investing? In our article about leveraged investing you can read everything you need to know:
What is automatic trading?
It is possible to trade completely automatic with special software. Through automated trading, you can invest money without too much effort. You can copy the results of other investors. Of course, you must be careful that you follow the right parties. When you follow a failing investor, you do not get positive trading results. In our article on trading signals you will find out how to trade automatically:
Investing with a small amountWith historically low-interest rates, you lose money by saving. As prices rise (inflation) you can buy less and less with the amount in your account. You can do better! Did you know that nowadays it is possible to invest small amounts: it does not matter if you have$50, $100 or $1000 … investing is always possible!
Is it worth to invest with a small amount?
Many people decide not to invest with a small amount, because they believe this is not interesting. Nothing could be further from the truth! If ever there was a good time to start investing, it is today. Even with small amounts you can build up a large amount in the long term. This works through the so-called snowball effect.When it snows one snowflake has little effect. However, all snowflakes together can form a snowball and as soon as it starts rolling it can create an avalanche! It is the same with investing. Of course, the $10 or 50 a month is not going to make any difference on its own. However, by constantly investing a small amount, your invested capital increases automatically.In addition, you benefit from return on returns. When you reinvest the money, you earn from your investment, and your money grows even faster. You will not only receive a return on the amount you initially invested, but also on the return you reinvest. That pays off in the long run! Let us see how much money you have left when you invest a small amount for 30 years with a return of 7%:
- $10 per month turns into $11,761
- $25 per month turns into $29,402
- $50 per month turns into $58,747
- $75 per month turns into $87,293
What should you look for when you invest with a small amount?
The biggest return killer for people who invest with a small amount are the cost. It is unwise to invest with a bank or an expensive broker. When you pay a minimum amount of transaction costs over each trade, it is almost impossible to achieve a good return. Therefore, take a moment to select a cheap party.It is also important to remember that your ability to diversify is more limited with a small amount of money. You will need to be more creative to minimize the risks of your investments. By using some different options in this article, you can still diversify. A fund can also help you spread your risks.
How do you get the best results?
It is important to have a realistic view of the return you will achieve. Experts often count on an annual return of 6 to 8 percent. This may not be exciting, but in the long run you can still build up great wealth. This is possible because you also get a return on your new investment. When you start with unrealistic expectations, you often take too big a risk and lose the full amount of your investment.It is wise to invest periodically. By doing so, you avoid investing a substantial amount immediately and then sitting on a loss for years. By constantly investing a small amount, you invest at both favourable and less favourable times. This gives you a nice, stable return in the long run.It is also advisable not to watch your performance too much. Research has shown that people who keep a close eye on their portfolio often achieve worse investment results. This is because, out of panic, they are more likely to close positions. The stock markets regularly go up and down, but in the long run the general direction is up. It is therefore a shame to close positions out of panic.
Automatic investingYou can automate your small amount investments. You can do this by, for example, depositing a fixed amount into your investment account each month. That way you do not have to look at your investments anymore, and you will still get a good result!
Important in trading: a strategyIt is important to invest according to a strategy. Starting investors often fail because they do not have a system or do not follow their system. Therefore, decide beforehand what you are going to do and why you are going to do it. By testing your strategy with a small amount of money, you can easily discover if the strategy will work for larger amounts and this allows you to slowly build up an income from investing.When choosing a strategy, you can choose to focus on news items or on chart analysis. A profit warning can for example be a good indication that the company is doing badly. The demand for the share drops, which can cause the price to collapse considerably. If this is the case you can decide to short sell a certain share.More and more people are also using graph analysis. Within each chart, you can recognize fixed, recurring patterns. By studying these patterns, you can automatically buy at important levels by using orders. When you make sure that with each investment you take a higher profit than the amount you risk, it can hardly go wrong.
When do you change from investing a small amount to a large amount?
By investing with a small amount, you learn what it is like to invest with real money. The principle of investing is the same with a large amount, but keep in mind that it probably feels different. Therefore, it is wise to start with a small amount. When you are completely comfortable with that amount, you can slowly build up the amount you invest with.
How can I start investing with little money?When you start investing, you are not always able to do this with a lot of money. For the novice investor who still has to gain experience, it is therefore attractive to invest with little money. But how can you successfully invest with a small amount money? In this article, you will find 8 proven methods you can use to achieve great results!
How can you invest with little money?It is very well possible to start investing with little money yourself. You can do this, for example, by trading with a broker:
- You will immediately receive a free demo to try trading risk-free.
- You can trade shares, commodities and currencies!
- You can never lose more than your deposit!
leverage to increase your investment with a certain factor. By using leverage, you can open a larger position with a small amount of money. In short, the greater the leverage, the higher the potential return. With modern brokers, you can use a leverage of 1:30. As a result, little money suddenly becomes a lot of money. Even with a small deposit of $100, you can invest over $3000!If you invest little money in CFDs, the returns on this investment product are often much higher than when you invest in products without leverage. This is because every $1 of profit is multiplied by the leverage.To give an example: if you use a leverage of 1:10, your potential profit is ten times greater. If you use a 1:30 leverage, it is thirty times greater. This can increase the returns for the investor with a small budget!However, remember that a lever works in two directions. Your potential losses also accumulate faster. When there is no more money in your account, you lose everything. Little money can also turn into no money.eBay and then sell them for more money. This is a fairly labor-intensive task that you just have to be in the mood for. Still, you can certainly get a nice extra penny with this.For example, you can look for products offered by people who have absolutely no idea how to market something. Products that are sold with vague, grainy photos often don’t do so well. However, the product can be of excellent quality. Therefore, invest in a good camera and present the products you sell neatly.
On eBay you can easily buy & sell stuff
Set clear goalsIf you want to start investing with little money, this requires a different preparation than if you would start investing with a lot of money. When we talk about little money, we are talking about amounts of about a hundred pounds or a multiple thereof and not the thousands of pounds that are sometimes used when investing.Before you start investing with little money, you must make your goals clear to yourself. The stock market tends to fluctuate, so you must determine how you want to respond to this.With little money you can, for example, choose to day trade. With day trading, you try to benefit from both the increases and decreases of the stock prices. For this purpose, you can make use of a so-called derivative. When you want to invest with little money, CFDs are a good option.
What is the minimum amount you can invest with?Most brokers have a minimum deposit of $100. This means that you only need to have $100 available to start investing. When you use a leverage of 1:30 with this deposit, you can have an invested capital of $3000. As an investor with little money, it is therefore also possible to open multiple trades.In short, as a novice investor, it is very well possible to invest with little money. Trading with little money ensures that you gain learning experience. Are you curious where you can invest with a small amount? We have made an overview of the brokers where you can trade with small amounts in, for example, shares:
The additional risksInvesting with little money entails additional risks. With a larger amount, you have a larger margin for error. It is advisable to risk only a limited amount of your assets on a single investment. If you invest with little money, this is often not possible. You then risk tens of percentages of your investment balance on one trade.As a result, you have much less room for error. Investing with little money is therefore not for cowards. If you are going to invest with little money, you must be prepared to lose it all.Since the margin for errors is much more limited, it is certainly advisable to try out the possibilities with a demo. By using a demo you can discover whether investing is something for you. Use the button below to compare the different demo accounts:
How to invest successfully
Successfully investing in the stock market, everyone wants to do that! In this article you will find the most important key points you need to achieve successful results as an investor, even as a beginner! Discover the secret recipe for the most successful investments put together by the “Gordon Ramsay of the Dutch stock exchange” and start investing successfully right away!
Point 1: practice, practice and practice!
If you want to invest successfully, it is essential to practice sufficiently. There are different ways you can practice. You can get a piece of old-fashioned paper and keep track of which investments you would or would not take. Then you can calculate what a profitable result would yield using your strategy.
However, it is more practical to directly open an account with a broker. Here you can usually practice as much as you like and without risk by means of a demo. It may be even more sensible to invest first with a small amount, for example 100 pounds. That way you have the tension, but you do not run a big risk.
So keep practicing and investigate why an investment turned out to be successful or unsuccessful. You can keep track of this in a trading journal, which in the long term can become a book full of wise lessons!!
Point 2: discipline
Just like with everything in life, you need a lot of discipline to achieve successful results. Many traders struggle to act with discipline in the beginning. This is because many people are programmed to listen to an authority. When you invest, no one tells you what to do, and suddenly everything is possible.
In order to avoid blindly and randomly opening all kinds of positions, it is wise to draw up rules. Determine for yourself when you can open an investment, how much money you can risk per investment and when you must get out of it. By setting clear rules for yourself, like a strict schoolmaster, you prevent yourself from losing a lot of money immediately.
Try to use that discipline in other parts of your life as well; in this way you will become more successful. For example, try to exercise regularly and to live a healthy lifestyle to keep your brain sharp. Discipline is a way of life!
Point 3: when in doubt, stay away
It is always unwise to carry out an investment when you are in doubt. Psychological research has already shown that these kinds of emotions can be warning signs of the unconscious; your brain sometimes recognizes certain patterns and can therefore know more than you think. This intuition will become stronger and more reliable as you become a more successful investor.
It is also important to be sure about your investment because otherwise you will act irrationally. People who are insecure about something make faster, unreasonable decisions which can be disastrous for your investment results.
Point 4: follow the flock, but not always
Many novice investors think that they have to be original: when everyone says A, you have to say B. Yet this is often not the case with investments. When rates have been rising for months, it is unwise to bet on a declining market; especially in the short term. Always try to invest in the direction of the trend so that you take the maximum profit and thereby invest more successfully.
Incidentally, there are also situations in which it is unwise to follow the herd. When, for example, negative news comes out, the price of a share can drop enormously. This kind of extreme movement based on a negative news item also often results from herd behaviour. In case of a panic reaction, always try to analyze whether the extreme movements are justified.
Point 5: spread your risks
In the casino, it’s gutsy to bet all your money on red; in the investment world, however, we call this foolish. Successful investors spread their risks as much as possible. You can do this by dividing your investments over various securities, such as buying multiple stocks from different regions and sectors. You can also spread your risks further by purchasing part of your portfolio each month. In this way you prevent yourself from investing all of your money just before an upcoming crisis.
Spreading your risks is also important when trading in the short term. You do this by always applying a fixed percentage to each investment. For example, if you have 1000 pounds in your account, you can decide to risk a maximum of five percent per investment. In this way, an unexpected price movement cannot cause you to lose the entire deposit.
Point 6: control your emotions
If you want to trade successfully in the stock market, it is important to control your emotions. Many people suffer from loss aversion. This is a psychological term that indicates that people prefer to avoid a loss rather than take the chance to earn a similar amount. However, this tendency to avoid losses is your biggest enemy when you want to become a successful investor.
As an investor, it is important to regularly take your losses. Many beginners leave losses too long and take profits too early. This is because people find it very painful to lose. You can learn to take losses by practicing a lot and by using fixed targets. In this way, emotions play a much more limited role in your investments.
Point 7: successful analysis
It is important to base your investment decisions on something. Therefore, make an informed analysis. This can be done by looking at the technical situation. Check if patterns are visible in the graph and respond to them by opening a position at the right time.
You can also use the news. For example, stocks react strongly to profit figures and other news items that influence profitability. There are many ways to perform an analysis. It is important to discover your own method and to determine fixed, rational rules with which you decide whether to open an investment.
Creating a successful analysis based on a strategy is a process that costs a lot of time. It is often not possible to take over the strategy of another investor, as not everyone feels good about using certain analysis options and risk levels.
Learn the basics of analysis right away with the Plus500 tutorial!
Point 8: pay attention to the costs
Finally, many starting investors forget to look at the costs. However, the costs strongly reduce the return on your investments and it is therefore essential to choose a broker with an attractive cost structure. If you want to invest with a small amount, it is wise to trade in derivates or CFDs. This is best done at an online broker.
Even if you want to buy physical shares with a larger amount, it is important to pay close attention to prices. The difference between 0.5% in costs and 1% in costs is extreme, and increases exponentially over the years. Therefore, take the time to study and try out different brokers.
In conclusion: successful investing
- Successful investing means lots of practice with a demo and later small amounts.
- Successful investing means establishing clear rules and using discipline.
- Successful investing means listening to your intuition and when in doubt, staying away.
- Successful investing means following the trend, but not getting caught up in panic.
- Successful investing means spreading and reducing your risks.
- Successful investing means controlling your emotions and dealing with loss.
- Successful investing means the implementation of a rational analysis that fits you.
- Successful investing means considering the costs and carefully choosing a broker.
Start trading with a free demo!With a free demo account, you can try your hand at trading without the monetary risk. It’s the perfect way to test your investing skills. On this page you can compare the best demo accounts to test trading in stocks & Forex for free!
Why should you try trading with a demo?
- Demo investing is 100% free.
- Get started in minutes.
- The results are real.
- You will learn how to trade.
|Buy stocks without commissions. Your capital is at risk. Other fees may apply.|
|Speculate with CFD's on increasing & decreasing prices of stocks! 82% of retail CFD accounts lose money.|
|Benefit from low fees, an innovative platform & high security!|
|Speculate on price increases and decreases of stocks with a free demo!|
Other trial accounts for you to tryIn this section of the article you will find a list of the best sites to try trading with a risk-free demo. Later on, we will discuss what you can do with your demo account. Do you want to know which site is right for you? It is possible to open multiple trial accounts, so you can compare the trading platforms risk-free!
- eToro: social trading, follow investing trends.
- Plus500: active trading in CFD’s on all popular shares.
- Marketsx: another big site where you can invest for free on a trial basis.
What are the benefits of trading at eToro?
- At eToro, you can buy stock & trade in shares by using CFD’s.
- At eToro, you can buy shares at no additional costs.
- You can trade socially: follow other traders completely free.
- Use the easy-to-use and multilingual software.
How do you open a demo account with eToro?Opening a demo account with eToro is simple. On the home page, use the join now button.You will have to fill in some basic information. After you filled in the details, you can log into the eToro trial platform.Within the eToro demo platform you can try your hand at investing with a demo account filled with $100.000.
Investing with real moneyeToro has a minimum deposit of $200 for a new account. With this money you can choose to buy shares without any leverage. You can also actively speculate on the quotes by using CFD’s. After sufficient practice, this is the perfect way to explore the possibilities of investing even further!
What are the benefits of investing with Plus500?
- At Plus500 you pay 0% commission on all transactions.
- At Plus500 you can also trade with smaller amounts.
- You have the option to short a given stock & profit when prices fall.
- All known international CFD shares are available to you at Plus500.
How do you open a demo account at Plus500?You can easily create an account on the Plus500 website. At Plus500 you will receive $40,000 in virtual capital that you can use to make trades. Of course this capital is not monetary and holds no value whatsoever.If you like the sound of Plus500, click the button below to begin your free trial! You will have the option of logging in to an existing account, or creating a new one. It is also possible to link your account to your Google or Facebook account.To create your free demo account, you only need an email address and password. If you want to trade with real money, you will need to add some more personal details.
Trading with real moneyAt Plus500 you can trade with real money stating from $100. Before you can start trading with real money, you must convert your account from a trial account to a cash account. To do so, there will be a test to verify your identity. According to the law, it is not allowed to open an investment account anonymously. You must confirm your identity by uploading a copy of your passport.
What are the benefits of investing with Marketsx?
- At Marketsx you benefit from very low transaction costs.
- You can use advanced analytical tools.
- You can invest in more than 2200 stocks.
- Receive expert advice within the platform.
How do you open a trial account with Marketsx?On the Marketsx website you can easily create an account by entering an email address and password. The investment software is completely web-based, so you don’t need to download anything.Within the online software you can easily switch to the free demo. Using your trial account, you can try out the possibilities of investing in stocks with a demo amount of $10,000.Whenever you’re ready, you can easily switch to a real money account. To do this, you will, of course, have to enter some more personal information. After all, opening an investment account is similar to opening a bank account.
Frequently asked questions about trading with a demo account:In this section we answer the most frequently asked questions about investing with a demo account:
- How can you use your demo account?
- When & how can you invest with real money?
- What is a demo trading account exactly?
- What can you do with a trial trading account?
- Is a demo always free?
- What is the difference between a trading simulator and a demo account?
- What can you invest in with a demo account?
- What are the functionalities of a demo account?
- Why do brokers provide free demo accounts to clients?
- Can you lose more money than you deposit?
Demo trading: the advantagesFor people who have never invested before, it is always recommended opening a free trial account first. Within the demo account you will learn to deal directly with the software and the various tools available. Opening positions at different times will teach you what is sensible and what is not, so you will achieve better results when you start trading with real money.A demo account can also be useful for the advanced investor. You can test new strategies and investment methods before applying them with real money. By doing so you can reduce the risks and achieve the highest possible return!
How do you get started with a trial account as a beginner?You must thoroughly research the stocks you plan to invest in before you open a position. In our free course ‘learn how to trade profitably’ we teach you the essentials. After you take the course you are fully ready to start trading!Wait before you make your first deposit! Your first deposit can quickly disappear if you make a wrong move. It is wiser to practice first with a demo account with fictitious money so you better understand the features and capabilities of the demo. When you are ready to trade with real money, you can make your first deposit.
Online investing in the stock exchange: manual for beginnersWith the advent of the internet, online investing has become more accessible than ever. For many new investors, it can sometimes be difficult to see the wood for the trees. With this guide, we would like to help you on your way in the world of online investing: before you know it, you will be buying your first share.
How does online investing work?
Online investing is very accessible nowadays: once you have opened an investment account, you can open several investments with a click of your mouse. For example, you can buy shares or participate in an investment fund. You can choose to speculate or buy shares for the long term. We briefly discuss the best parties to invest with on the stock exchange!
How can you actively trade online?
Some people would like to actively invest on the internet: you speculate on price rises & falls in the short term. A good party to speculate on in the short term is eToro. eToro CFDs allow you to open positions on both rising and falling prices. Would you like to try trading online with eToro for free with a demo? Then use the button to instantly open a free unlimited demo:
What are the best brokers to invest online?
Do you want to invest your money for the long term and are you looking for a good broker? In that case, you need an account with a broker. A broker is a party that buys shares and other investment products on your behalf. We have listed the best opportunities for you:
Option 1: online broker DEGIROFor many people, DEGIRO is the best option. With DEGIRO you pay low transaction costs when you buy shares: these costs amount to £1,75 + 0,014% over shares. If you prefer to invest in a fund, there are many funds for which you pay no transaction costs at all. Use the button to try investing with DEGIRO:
Option 2: eToroeToro is a reliable online broker when you want to buy & sell shares yourself with smaller amounts of money. At eToro, you pay absolutely no commissions, which means that you can achieve good results even with a relatively small amount. Use the button below to open an account with this broker:
What should you pay attention to when you want to invest online?If you want to invest online, it is wise to take the following into account.
Your investing experienceNot everyone has a lot of investment experience. When you invest in a fund or ETF, you do not need a lot of experience. If you prefer to trade actively yourself, it is important to study the markets sufficiently first. If you are going to invest yourself, you need a little more experience.
The costsIt is important to pay attention to costs. Many new investors allow themselves to be tempted by their banks to invest money at hefty rates. This is a shame! When you select the right broker, you often pay low transaction fees. Many passive funds also charge low fees: think for example of 0.2% on an annual basis.
DistributionWhen investing online, it is wise to spread your risks as much as possible. It can certainly be fun to invest online yourself. However, do not put all your money in your investments: choose, for example, to invest a part of your money in a fund. In this way, you avoid losing a large amount of money in case one type of investment does not perform well.
Reducing risksIt may be smart to reduce your risks at some point. When you are still young, you can take the necessary risks: after all, when the markets collapse, you have enough time to wait for recovery. When your retirement or another end goal is approaching, you have less time to wait for recovery. Therefore, draw up a clear plan and consider how much risk you want to take at different points.
How do you achieve good results with online investing?
Too many people start investing online with the expectation of getting rich. This is not the right mindset: it may sound boring, but a good investor also prepares well. For example, it is important to first think about what kind of investment products you want to invest in:
- Shares: you then become co-owner of a company.
- CFDs: you then actively speculate on the price development of securities.
- ETFs: another party invests your money in, for example, an index.
You can invest online with as little as 100 pounds!Many people wait to invest because they think that it cannot be profitable with a small amount of money. This is a pity: when you start early, you have more time to grow your assets. Therefore, in many cases it can be smart to invest a little every month. Would you like to know how you can invest with a small amount of 100 pounds? Then read our article about investing with 100 pounds:
What are the risks of investing online?
Investing online is certainly not without risks. Especially when you have no idea what you are doing, you can lose a lot of money. The stock market is constantly moving up and down, and you have to make peace with this. If you start investing with the conviction that you are always going to make money, then you will be disappointed. These kinds of ‘wrong’ beliefs can even adversely affect your investment results.Therefore, first think about the risks you are prepared to take. If you prefer to invest in relatively safe investment products, your potential return will also be low. If you don’t mind (potentially) losing a lot of money, you can invest in riskier products as well. With derivatives, in some cases you can lose the total amount on your account with just one investment.Investment products with a relatively low risk are (government) bonds, savings accounts and money market funds. If you are happy to take slightly more risk, you can invest in shares, index funds, ETFs and corporate bonds. Your return is then between three and eight percent, but you can also lose a lot more. Do you really want to achieve a high return? In that case, you can trade in real estate, commodities, penny stocks, high-interest bonds and cryptocurrencies.
What can you invest in online?
Shares: buying and selling stocks is still the most popular investment. When you buy a share, you become co-owner of that company. Some companies also distribute part of the profits in good times: you then receive a dividend.Mutual funds: investment funds come in all shapes and sizes. Funds can, for example, invest in shares, bonds and real estate. Investment funds often try to beat the market: not all of them succeed! That’s why you should first find out how the fund you want to invest in performs.Index fund: an index fund does not try to beat the market, but follows it as closely as possible. For example, you can invest in an index fund that tracks the FTSE. The transaction costs on an index fund are usually much lower.Target date funds: this is a special type of index fund in which the composition is adjusted as you get older. You set a target date yourself, on which you plan to exit. When that date comes into view, more and more risky investments are sold to switch to less risky options.ETF: an ETF is similar to an investment fund or index fund. A big advantage of an ETF is that you can trade them easily, just like stocks. This allows you to get in and out faster.Bonds: companies and governments use bonds to borrow money. When you buy a bond, you receive an annual interest rate on it. The price of a bond can also fluctuate in the interim under the influence of interest rates.Derivatives: you can also invest online by using a derivative. Examples of derivatives are CFDs, options and futures. These are the more speculative investment products.
The Dos & Don’ts of investing online yourselfWhen you do it right, investing is one of the smartest and wisest things you can do. To achieve the best results, however, it is important to make the right decisions.
Do: invest in what you understandOnly invest in products that you understand. Do not buy shares of a company that you do not understand and do not invest in complex investment products that you do not understand. Keep it simple: this way you will quickly achieve the best investment results.
Do: Spread your investmentsDon’t bet all your money on the same horse: by spreading your investments, you avoid losing a large part of your investment because one company is not doing as well as it should.
Don’t: don’t panicMany beginners panic when things go wrong for a while. A good investor knows that this is precisely a time to seize opportunities: when the stock markets fall, you can look for great bargains. Therefore, do not focus on the short-term result: the long-term horizon is much more important.
Don’t: invest with money you can’t loseInvesting online with money you can’t miss is the most stupid thing you can do. If you want to achieve a good return with investing, it is important to take the time to do so. Of course, you can’t do this when you have to sell shares in the meantime because the washing machine broke down.
Don’t: delay online investingMany people delay and wait for that one good moment to start investing. The big secret is that this moment will never come. You never know what the future will bring. If you step in staggered, you do know that if you step in earlier, it will be easier to build up a large fortune later. You will receive interest on interest, so your capital will grow in the long run.
What does it mean to invest yourself?When you start investing online, you open an account with a broker that gives you direct access to the stock exchange. Within your investment account, you can trade in all kinds of investment products, such as stocks, bonds, options and ETFs. When you then place an order, the broker will add the securities to your account on your behalf.In this case, the broker is only an intermediary: you yourself are responsible for taking your decisions and the results. This is also called an execution only broker. Some brokers do, however, allow you to use analysis tools to help you make a wise decision.Investing online yourself is especially attractive for independent people who like to make all the decisions themselves. Anyone who is 18 years of age or older can open an investment account: of course, this does not mean that everyone should do it. That’s why you should first think about whether investing online really suits you.
In short: why invest online?
- Online investing is accessible, even with small amounts of money.
- You can make use of user-friendly software via the internet.
- You will immediately receive a demo with which you can try investing.
- You can automate your online investments with orders.
Online CFD tradingAn interesting, fairly new investment method is trading CFDs. With CFDs, you can trade online in shares, currency pairs (Forex), index funds and commodities. You can trade CFDs from as little as $100. Because you can use leverage, you can also open a large position with a small amount of money. However, you can quickly lose a large part of your deposit. What are the main advantages of online CFD trading? Respond to rising & falling prices – you can go either open a long or short trading position. When you open a long position, you make money when the share price rises, while when you open a short position, you can make money when the share price falls. This possibility makes this method of investing 100% recession proof! Favourable rates – you can trade CFDs with a small amount of money. Unlike other providers, Plus500 does not charge a fixed commission. You do not pay a minimum amount per investment, which allows you to speculate on price movements in the short term. Increase your return with leverage – you can use leverage when investing in CFDs online. For example, if you deposit $100, you can open an investment worth $1000 without risking more than your deposit. The difference in price of the position ultimately determines your profit or loss. Low deposits – when you buy shares you need a decent amount of capital; this is not the case with CFDs. Because of the relative costs, you can start trading from as little as a $100.
Every day there are possibilitiesThe principle behind online trading is not complicated. Nevertheless, many people do not manage to achieve good results with their investments.When you start investing online, it is important that you are able to recognise the various trends:
- Up: a rising trend, the price is mainly going up. Buying is sensible.
- Down: a downward trend, the price is mainly going down. Selling is sensible.
- Sideways: the price moves back and forth between two points, buying at the lowest point and selling at the highest point is advisable.
An exampleSuppose you want to buy the Kemira share, and you see the graph below… which direction does the price development in the graph take?Right, up! Let me draw some lines in there. As you can see, there are two moments when the price clearly exceeds the resistance level. The old resistance then becomes the new support and these are nice entry moments.If you really want to make a serious online investment, this is already a very nice strategy: looking at the chart and determining attractive entry points for your trades. With a free demo account, you can get started and test if you can do this yourself!
Online trading, 10 minutes a day?
The strategy that I have briefly discussed here does not need to take more than ten minutes a day. When investing in CFDs you can work with orders. For example, you can set yourself to buy a share as soon as it rises just above the resistance you recognize.It is then important to set a stop loss, this is the moment when you automatically take your loss. Set this moment just below the resistance, in this way positions based on false breakthroughs are quickly closed. The trick then is to make sure that your profits are higher than your losses.For this, I use a minimum Reward:Risk ratio of 2:1. For example, if I want to take a loss of $100 on an investment, I make sure I earn at least $200 on that investment. You do not close the investment until one of these goals has been achieved! By entering a take profit and stop loss you can do this completely automatically so that you do not make any emotional decisions.Finally, managing risks is essential. By never risking more than two per cent of your account size on an investment, you make sure you don’t lose everything before your investments goes back into the right direction.When you consistently start recognizing a pattern and take your risks into account, you can achieve structurally good results. All successful & professional day traders work according to the principle ‘high profits, lower losses’.
What kind of results can you achieve?I understand that you are curious about the possible results when you apply such a strong level of risk management! Suppose 6 of your 10 trades are profitable, and you ensure that your profits are higher than your losses:
- 6 X 4% (2X maximum risk) = 24% profit
- 4 X 2% (maximum risk) = 8% loss
- Yield = 16%
- 4 X 4% (2x maximum risk) = 16% profit
- 6 X 2% (maximum risk) = 12% loss
- Yield = 4%
Do you want to start trading online?In the end, the best tip I can give you is to start trading online yourself. You now know the basics, advantages and possibilities of investing in CFDs: now it’s important to gain practical experience. By practising with a demo you’ll discover whether trading online on the stock market is the right thing for you. Take a look at our overview of demo accounts directly to start trading with a solid provider:
Introduction to investing guideIf you want to manage your money, there are several ways to do this. The first way is to put your money in a savings account. You then receive a low-interest rate and, due to inflation, you actually lose money. But you can also invest your money in bonds or shares, something that takes more energy, but also gives you a higher return! In this introduction to investing, we discuss everything you need to get off to a flying start!
Saving versus investingMany young people grow up thinking that saving is the best thing you can do. This is partly true: if you don’t save at all, you quickly get into trouble. It is therefore important to put enough money aside to be able to solve problems in the next 0 to 5 years. However, if you earn a nice salary, it is wise to invest some of it as well.This is because the interest you receive on a savings account is very low. Inflation and taxes reduce the real value of your assets. By investing your money in a smart way, you can actually build up a good amount over a longer period of 10 to 60 years.Warren Buffett sums it up nicely: investing is putting money aside to receive more money in the future. In practice, you will therefore achieve a much higher return with investments than with savings.
Compound interestAn important part of the introduction to investing is the principle of compound interest. As an investor, you receive return on return: in the long run, your capital grows exponentially.Of course, there is a risk associated with investing: stocks have an average return of 7 to 8 percent, but the risk of this type of investment is also higher. Especially in the short term, you can lose money with investments. With a savings account you know for sure that the money will still be there tomorrow.A good way to deal with this is to periodically step in. You can do this by investing your money in an ETF, for instance. An ETF invests your money in various shares for you, which spreads the risks nicely. Moreover, the transaction costs for this type of investment are low, so you can even get started with a small amount of money.
Invest smartlyIf you are smart about investing, you will reap the rewards in the long run. Many people react quite impulsively when they learn about the stock market: they try to predict the market and apply complicated strategies. If you like this, you can certainly do it. However, for most people, this is not the best strategy.By starting young, you can build up a large fortune even with a small amount of money. With a monthly investment of $200, for example, you could be a millionaire by the time you are 65. Patience, spreading your risks and following your plan are therefore important factors when you start investing.
How do you start investing?After this short introduction, you are well-prepared to take the first steps and make your first investment. Investing is done at a broker: a broker is a party that can buy investment products on your behalf.Opening an account at a broker is usually free. You only need to leave some basic information so that the authorities have an overview of everyone’s assets. Use the button below to find out which brokers offer favourable conditions for your investments:
Introduction to your first investment: a planBefore you start investing, it is advisable to draw up a clear plan. First consider what your WHY is or the reason why you want to start investing. Do you want to buy a house in a few years’ time or are you busy building up your pension? Whatever your goal, it is always important to work towards it with a plan.Then see which HOW suits you best. If you want to build up your assets slowly, you can invest in one or more ETFs according to the dollar-cost averaging principle. You then invest a fixed amount every month without looking at it too often. However, if you want to invest actively to build up an income, it is best to start day trading.An important part of your investment strategy is deciding how much money you want to invest. Only invest money that you can afford to lose in the coming years: that way, if the market does not perform well, you do not have to exit at an unfavourable moment.After you have started investing, it is wise to keep track of your progress, especially in the beginning. That way, you can be sure that your investment plan is right for you.
Methods of investingSo, if you want to manage your money, you can put it in a savings account. But this is not a real increase in the value of your money, as the annual inflation cancels the return on the interest. Another way to invest is to invest your money in governments and companies, which are remunerated. This type of investment includes investing in stocks and bonds. What can you invest in?
- Shares: buying and selling ownership of companies
- Bonds: trading in debt securities of companies and governments.
- Forex: short-term foreign exchange trading.
- Options: these allow you to speculate on, for example, stocks.
- Commodities: think for example of gold and silver.
- CFDs: for short-term trading where you can also bet on falling prices.
Speculate or invest?When talking about investing in shares or bonds, the word “speculation” is often used. This deserves some explanation. Speculating refers to trading in stocks or bonds to make a quick profit. The word investing, is often contrasted with this. Investing is more focused on the long term.If you want to actively trade in the short term, it is wise to open a free demo account with a broker. This way, you can practice short-term trading and learn to recognize the patterns. However, if you want to trade passively and for the long term, it is wiser to place your money on a trading account.
Investing in sharesTo enable growth and investment, companies need to use money. They can get this money from previous profits or by issuing shares. When the value of a company increases, the value of its stocks usually increases as well. In exchange for buying shares, the company often makes a dividend payment to the stockholders (distribution of a part of the profit).
Play it safe with bonds?It is also possible for companies to issue bonds to raise money. This can best be seen as taking out a loan from the bondholders. The big difference with shares is that someone who buys bonds is not co-owner of the company. Instead, he has an IOU from the company in his hands. In short, a bondholder lends money to a company in exchange for interest and an IOU.
Achieving price gainsIn short, as an investor you can increase your assets with, among others, stocks and bonds. In the case of shares, the stockholder is paid a dividend, and in the case of bonds, an interest is paid.But there is another way to make a profit with shares and bonds. By selling the stocks or bonds, a profit can be made, as a result of price differences. If the share or bond is worth more at the time of sale than at the time of purchase, you have made a price gain.
Becoming an investor: how to become a better investor?Becoming an investor is easy, but becoming a good investor is not. In this article we look at how you can start investing in a few steps. The tips in this article will help you avoid the worst mistakes and increase your chances of achieving good results!
How can you become an investor yourself?You can become an investor yourself by opening an account with a broker. A broker is a company that makes it possible for investors to trade shares and other investment products themselves. You can choose to actively speculate on the markets, or you can invest for the long term by buying stocks and index funds.
How can you invest?You can also choose to buy shares and other investments for the long term. In this way, you build up a larger capital over a longer period. At eToro, you can invest in stocks and shares without paying any commissions. At this party, you pay no commissions, so you can achieve better results. Use the button below to open an account at eToro:
How can you invest actively yourself?A great place to actively speculate using CFDs is Plus500. Do you want to try the possibilities of active trading at Plus500, completely free & risk-free? Simply use the button below to open an account:
How can you become a better investor?You now know at which parties you can best become an investor yourself. When you start investing, you want to achieve good results. In this part of the article we will discuss how you can become a better investor.
Choose investments that suit youThere are many investment methods and not all of them are equally suitable for every type of investor. If you want to become a successful investor, it is therefore important to choose investment products that suit you well.An important concept here is the so-called risk appetite. If you are young and have a lot of time, you can choose to invest in risky stocks. Risky stocks perform well in the long term, but they are also very volatile. If you do not have enough time, you can lose a lot of money with this type of investment.When you are older, you might not have this time, so you can better opt for more stable investment products. It is therefore essential to first determine which investment product suits you best.
Learn to loseAn important characteristic of the successful investor is that he or she dares to lose. By regularly taking losses, you ensure that your stake does not evaporate through one wrong decision. On the other hand, it is important to leave your profits open as long as possible so that you achieve the best possible result.You do this by deciding in advance where you will take profits and where you will take losses. For example, you can determine that you will use the lowest or the highest point on a day initially as the point to take a loss. Subsequently, you can only move this moment, which is also called a stop loss, in the favourable direction at which your maximum loss becomes less: in this way you ensure that you maximize your profit without exponentially increasing your risks.
Do not panicThe biggest mistake you can make as an investor is to panic. The stock market is unstable and stock prices will regularly fall sharply.Of course, it is smart to sell your shares when there is a good reason for doing so. When the company commits fraud, for example, or when a competitor is a better alternative. However, a stock market crash is not a good reason: after a stock market crash, you often see a recovery. It would be a waste to sell all your shares at the time when the price is falling.Remember that before you sell the shares, there is only a paper loss. A paper loss is an unrealized loss: when the stock market recovers, this loss can even disappear completely. A good tip is therefore not to constantly look at your screen, especially during a crash: don’t focus on the red numbers, focus on your future plan.
Invest in things you understandWhen you want to become a better investor, it is important to invest only in investment products that you understand. Too many people invest in things they cannot even explain properly. Think about complex financial products or shares of companies of which they do not even know what they do.The famous investor Warren Buffett successfully follows this rule: he only invests in companies of which he can explain in a few sentences exactly what they do. With this strategy, he manages to beat the market indices year after year.
Keep it simpleWall Street films often give us the idea that investing must be very complicated. In practice, a simple strategy is often a better strategy. Especially as a beginner investor, it is not necessary to invest with dozens of indicators in a selection of the more than 20,000 shares listed on the American stock exchange.Instead, start by keeping an eye on a small basket of shares. In this way, you will keep abreast of the latest developments in the stock market and be able to achieve the best results.
Accept that timing may be impossibleThere is much debate about whether market timing is possible. In any case, it is clear that timing the market is very complicated and that even the best fund managers cannot do it. It is therefore more important to apply a good strategy than to time the market well.If you invest for the long term, you can use dollar cost averaging: you periodically buy a certain quantity of the share, which means that you buy at both the lower and the higher prices. You never know for sure whether the market is at a low point or a high point.When you trade actively, timing is also less important than you might think. Sure, by timing well, you can make a nice return. But it is more important to handle your risks well. For instance, if you make sure that profitable investments yield more than loss-making investments cost, you will achieve better investment results.
You are allowed to make mistakesEven good investors make mistakes. However, to become a better investor, you must learn from your mistakes. You do this by regularly analysing your performance. By subsequently correcting systematic errors in your way of thinking, you can improve your investment results. Making mistakes is 100% forgivable, but ignoring them is not.
Become super-rich with investingMany people, especially young people, decide to invest because they have heard that it is a good way to become rich. Such expectations are magnified by the stories you read online of people who have never invested and have become millionaires with just a few pounds.At the same time, you see that many people stop investing because it turns out not to be so simple after all. Becoming an investor is easy, but consistently profitable investing is not. There is a lot of jargon in the stock market world and if you want good results, it is important to have realistic expectations.In any case, it is important to remember that investing is not a get-rich-quick scheme. It is a marathon, not a sprint. There are no guarantees and it is important to invest only with money you can afford to lose. By starting with correct expectations, you can become a better investor.
Becoming an investor is simple: now invest successfullyMany people ask me why so few people become investors when it is relatively simple. This is because becoming an investor is simple, but because of the wrong mindset it is difficult for many people to become successful. From my experience and the experience of many other investors, it has regularly emerged that the people who succeed do not do so because of their great strategy, but because of their way of thinking and acting.If you give ten people a strong system, all those ten people will achieve a different result. This is because we all have different values, emotions and character traits. Once you understand what your strengths and weaknesses are as an investor, you can achieve better results.Do you want to try investing with a risk-free demo? Use the button below to compare the best demo accounts:
When I was 16, I secretly bought my first stock. Since that ‘proud moment’ I have been managing trading.info for over 10 years. It is my goal to educate people about financial freedom. After my studies business administration and psychology, I decided to put all my time in developing this website. Since I love to travel, I work from all over the world. Click here to read more about trading.info! Don’t hesitate to leave a comment under this article.