Stocks and shares as well as forex trading has many terms, some of which need to be understood well
A 'stop loss' or 'stop loss order' is often employed to instruct a broker or automated trading system to exit a trade before the price drops too much (this is decided by the trader) and therefore to stop further loss of money. It can be used for both long and short trades.
In other words, before entering an order to buy or sell a currency pair or stock, a predetermined price is set. It is lodged with a Bank or Broker and offers 24-hour protection and will float until either cancelled or hit. The 'secret' is knowing to protect your purchase or sale of a currency from negative movements in the market overnight or over a period of days/weeks.
Stop loss orders do not attract any fee or other charge and is an excellent way for traders to protect themselves from negative movements while leaving the door open to benefit if the market continues to move in its favour.
What you choose to buy, when, and how long to keep it is the result of what you learn. You can get all sorts of advice, you can see stock prices on TV, with commentary from 'experts'. There are newsletters, companies that pick stocks that are likely to rise before you sell them. It can be a bit of a minefield!
Once you have opened your brokerage account, you may find you can buy shares in companies based in different countries or regions. Sometimes a company's shares are traded on more than one stock exchange around the world. However, if not, your broker may be able to arrange overseas share purchases on your behalf.
One of the first things you will notice when you take an interest in the markets is the variety of ways that charts are used to plot the movement of a stock or commodity. T
his can be displayed as a simple line or bar, but a far more intuitive method of seeing trading activity is with the popular Candlestick Chart. Learning how to read these gives a trader a significant advantage in determining the strength of the trend or next direction of the share or forex pair. It's worth learning more about candlesticks and here you can download a free CandleStick ebook.
However, it's not enough just knowing how to read charts. You also need to know how to accurately draw trend lines, analyze risk, and predict when reversals will occur. That way you can get in at the beginning of big moves and 'ride them' for all they are worth.
There is also a software program that does most of this for you. It is the result of a professional trader's active experience over almost twenty years. DecisionBar Trading will help you make trading decisions whether you are a long-term investor, short-term swing trader or day trader.
A Decision Bar is a specific candlestick on a candlestick chart or a specific bar on a bar chart that presents a natural trading opportunity. When using Decision Bars, the timing and direction of potential trades are pre-determined. All that is left for you to do is evaluate the risk and determine if you wish to take the trade. DecisionBars are so powerful that even if you took every trade offered, you would make a profit on most stocks with reasonable volatility.
Get more information about DecisionBar Trading here.
Exchange Traded Funds
ETFs are another very popular form of trading investment which can give better returns than ordinary stocks, and they are quoted and traded on major stock exchanges in exactly the same way.