Stock trading is an investment that is more on prioritizing the short-term profits rather than the long-term ones. Diving into this market is too risky without the right knowledge and understanding. Are you interested in investing in stocks? Do you think that it’s more reliable than trading Forex? When it comes to reliability, people have different opinions on it.
Some people think that trading stocks are a reliable investment while Forex is like a game of luck. But before anything else, you must understand what stock trading is all about and how MetaTrader 5 (MT5) trading platform can help you achieve your goals. One thing that needs to be understood is the fact that not all who buy or sell stocks are considered stock traders. This depends on the frequency of how the person buys or sells stocks, they might fall into these categories – investors or traders. Traders are those who constantly buy and sell throughout the day while investors are those who buy at regular intervals and sell very seldom.
The Definition of Stock Trading
Stock traders are those people who buy and sell stocks with a particular goal in mind – to capitalize on the price fluctuations which happen every day. Some traders opt-in betting in the Forex market hoping to earn some bucks in the next minute, an hour, or even a day or two. They like this scenario more than owning the stock at a blue-chip company where it remains there for the years to come. Stock trading is divided into two types – Active Trading and Day Trading.
Day Trading is a type of Stock Trading that involves an investor who plays very carefully with the stock market. They are very careful in selling, buying, and closing their trading positions in one day.
Active trading is a type of Stock Trading wherein the investor places 10 traders or more every month. Most of the time, these traders utilize a strategy that relies strongly on the market’s timing. They try to take advantage of the short-term happenings to make a profit.
Simple Steps To Trade Stocks in MetaTrader 5
If you are trying stock trading for the first time, you should know that there is a very reliable trading platform that you can use – the MetaTrader 5 (MT5). It has been in the industry for so many years and brokers regard it as one of the most trusted trading platforms to date.
Step 1: Opening an Account With a Licensed Broker
The first thing that you need to secure when trading stocks is a reliable broker. You can find a lot of brokers online, so choose wisely.
Step 2: Set A Limit on Your Stock Trading Budget
When setting a budget, you must allocate not more than 10% of your funds into the individual stocks to avoid exposing your savings to a lot of volatility. This is just one of the many risk management that you need when starting stock trading.
Step 3: The Proper Use of Market Orders and Limit Orders
Market orders will buy or sell a stock as soon as possible whenever the best price gets available. Limit orders will only buy or sell a stock at a specific price that the trader personally listed.