Online share trading can be a liberating experience
By Martin McAllister
The old world of stock-broking is changing rapidly: the practice of dealing in stocks and shares, for instance, is no longer purely the realm of high-flying financial executives, as greater numbers of ordinary people are taking part. However, perhaps the biggest innovation in modern trading of stocks and shares is the advent of the internet. Today, a number of online share dealings allow ordinary people to participate in the stock market without ever having to leave their homes.
Whether you're interested in building your investment portfolio, or you're simply looking for a tax efficient investment, trading in stocks and shares online is likely to be a good option for your financial needs. But if you're seriously thinking about embarking on online share dealing, it's important to first evaluate which product matches your investment goals.
Once you've done this, you will also need to assess your investment options in order to choose from a broad range of tradable products and investment applications. Many stock-broking sites will offer a variety of online trading products; from simple stocks, shares and funds to covered warrants and listed CDFs. Funds, for example, allow traders to diversify their investment portfolio and spread their risk. Investment notes, on the other hand, invest in bespoke, one-off products to diversify your portfolio, as well as generate income, limit risk and access investments that are not usually made available to investors.
If you're a new investor in online share dealing, it's also important for you to understand the types of risk that you can face. Market risk, for example, relates to factors that can affect the stock market as a whole, like rising interest rates, for example. Alternatively, unique risk relates to specific stocks and shares. A good investor will minimise his or her unique risk by a process of 'diversification', whereby an investment portfolio is spread over a range of stocks in different market sectors. This allows investors to spread their capital over a range of ventures.
If you're looking to start trading in stocks and shares online, make sure you equip yourself with some basic knowledge before diving in at the deep end. This way, you'll better understand where your investment is going. Many online share dealing sites will offer their own advice and guides to trading, as well as information on the range of investment products and accounts on offer. So novice investors can rest assured that they'll always find the relevant advice and information appropriate to their investment needs.
About the Author
Many online share dealing sites will offer their own advice and guides to trading, as well as information on the range of investment products and accounts on offer.
Martin McAllister is an online freelance journalist. He lives in Scotland.
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