Stock Investing Strategies

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Profiting in the Financial Crisis: Online Stock Market Trading and Betting

The current financial crisis is set to be on a par with some of the biggest crashes of the 20th century, and all outlooks for the future look pretty gloomy. Nevertheless there is still the opportunities for traders, investors and enthusiastic amateurs to earn a good income by making use of the variety of online share dealing and trading websites that have revolutionised our access to the stock market.

Times of economic recession usually mean, amongst other things, that inefficient and wasteful parts of the economy are cut out. Only the strongest and most adaptable survive. The same goes for individual investors. The old school way of doing things, going through traditional stock broker, often means you end up paying pretty high fees. There are brokers who would take a 20% cut on investment profits in addition to a 2% fee annually. That can turn a 10% return into just 6% – even less depending on your management fees. The problem becomes even more acute when you factor in the credit crunch and the falling rates of profit. It’s a simple fact that it has become more difficult to turn a healthy profit from dealing with traditional stockbrokers than it used to be.

But times, they are a changing. As the digital age matures, weve got access to instant real time information, high speed internet and sophisticated trading software. What this means is that you are now able, to a certain extent, to cut out the guy in between taking a cut of your profits, and trade directly on the market. Online share dealing websites mean you can take control of your investment porfolio for very little cost.

An added benefit is that when you switch to online trading you can take a long term view of your investments. It makes a lot more sense than just looking at your next gain or loss.

A consequence of the lack of predictability of the markets in the current financial climate, means that trading techniques such as financial spread betting are also on the rise. Rather than buying shares at one price and selling when they rise, spread betting doesn’t involve ownership at all; you simply bet on whether and how much the price will rise or fall. It can be risky, but if you know what youre doing it can yield excellent returns. A variant of financial spread betting is CFDs, or Contracts for Difference. These are, quite simply, contracts between two people where each agrees to pay out on the difference between initial and final stock prices over a period of time. Both are an increasingly appealing option to actual share ownership for many investors. They are both also really simple to get into online, which has also lead to the increasing usage of online CFD trading and spread betting of late.

So what is the conclusion to all this? Exactly like businesses and corporations, individual investors need to be thinking about cutting their costs, improving efficiency and looking for new opportunities. For the individual investor looking to remain profitable while others collapse under the recession strain, it might be time to switch to trading online.

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