Different types of online trading

Different types of online trading

Online trading has mostly replaced broker directed trading for the vast number of people due to the convenience, affordability, and better trade execution common with it. Part of the benefit of online trading is the vast access of different online trading investment options, strategies, and markets that it grants to you. This article will highlight some of these types of online trading.

Investment Options

When you trade online you will gain access to a vast number of different investment options. Stocks and bonds are two of the best known investment options, but there are many others. An online trader can own and trade online in an mutual fund, electronically traded fund (ETF), commodities, options, and master limited partnership, just to name a few. These options allow online traders the ability to truly diversify their holdings into a wide range of different investments.

Investment Strategies

Online trading provides investors with the ability to trade in a wide variety of different investments and to employ a wide number of different strategies while doing so. Online traders can go long or short on various investments, or on the market in total, and can trade unique things with options trading. An example of an option trade that is unique and may not correlate with other trading strategies is betting on the volatility of a stock or index. If a stock does not fluctuate significantly, either up or down, you can set up an investment that bets that this will not happen for a specific time period by writing option spreads on either side of the investment. While this may be an more exotic trade scenario for many people, it goes to show that there are a wide range of different trade strategies that an online trader can implement.

Markets

While people in the United States will commonly think of the New York Stock Exchange as the be all and end all of the stock market it is really only one of a number of different markets where you can trade around the world. As an example, there is the London Stock Exchange and Shanghai Exchange, each of which provides greater access to international markets. Many online trading sites allow online traders to access these international markets.

Summary

Ultimately, online trades are able to gain access to a wide range of different investments, strategies, and markets which were never previously accessible to anyone but the most sophisticated and wealthiest of investors. These expanded choices allow online traders with the ability to exert greater control over their finances in ways that were previously unimaginable.

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