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7 Reasons Why Online Trading Has Become So Popular

04 January 2020 | 3 comments | Posted by Che Kohler in Money Talks

The popularity of online trading

If you've spent any time browsing the internet or watching videos online, you would have probably been bombarded with several ads from online trading or forex trading platforms trying to get you to use their services.

What previously used to be an institutional capital investment tool has now been opened up to retail investors. Anyone with a bit of capital to spare can now trade on a global scale and take advantage of different markets where they feel they can get a good return.

Online investment platforms are not all the same; some specialise in forex trading; others may deal in shares, commodities, derivatives or even cryptocurrency. Taking control over your finances and making bets on companies or markets is risky business, and only a few may have an appetite for it. So why is it that these platforms have become so popular?

Online trading continues to grow

Online trading is becoming a popular concept, especially with more people are getting interested in finding opportunities to earn and income online. While the motivation to join online trading is to increase one's income and perhaps free themselves from the labour force, this isn't a silver bullet to economic freedom by any stretch of the imagination.

While it is possible to make a profitable trade as a novice, many successful traders have spent years perfecting their art, and this should be a lesson to anyone looking to make online trading their income stream of choice.

1. Easy access

The growth and improvement of the internet in terms of cost and speed has lowered the barrier to entry, and more people can now access these online services to start trading within a matter of minutes. There are even trading platforms that now specialise in allowing you to trade from your Smartphone. Since mobile phones and apps have become the preffered device to access the internet for many people in the modern world.

Trading is no longer a reserve of financial experts but is now open to ordinary people interested in the forex market. The internet has also revolutionised trading, not only making it convenient but also real-time.

2. Access to education

Thanks to the internet, you do not have to be a pro to be able to learn to trade online. There are many online resources which you can take advantage of to work on your skills and source mentors or guidance from various experts. You can now specialise in one form of trading and follow what other traders are doing and what they are saying about these markets and try to take advantage of the information you receive.

3. Reaction speeds

Since the internet allows for instant access from any device, it makes online trading more agile, and you can quickly react to stories that break in the news that can affect market prices. Instead of having to go through a third party and suffer from time delays you can buy or sell at the drop of a hat or set buy and sell orders that automatically fulfil if something matches on the various order books.

4. Open markets

Another reason why online trading is still thriving in this day and age is that forex markets are always open. Most, if not all, of them, are open 24 hours a day. Since online trading is global, there is always an open market somewhere in the world.

5. Additional income streams

For anyone looking for a side hustle that can bring in a generous amount of extra income, online trading can be a lucrative endeavour. Depending on your appetite for risk and the amount of capital you're willing to wager, you can start slow and grow your portfolio over time.

As you begin to make more profitable trades and grow your capital investment, you can remove your principal investment and trade with what you've made to build an additional stream of income over time.

6. Allocating capital as you see fit

Online trading platforms provide the agility that investing with an institution cannot compete with since you can get in a rather low investment minimum, you can also take advantage of spreading your capital across several markets to mitigate risk. An example would be to spend some capital on trading forex and another portion on shares, so you're not only exposed to one market but several.

This helps price discovery and exposes you to new opportunities you could have missed if you focused on one type of trade. Diversifying also prevents you from losing all your capital in a market crash by reducing your risk of overexposure in one type of trade.

7. The ability to earn remotely

Since online trading can be done from any digital device with an internet connection, it allows you to earn money anywhere in the world. Giving you unlimited access to the markets allows you to trade while you are at home, at work, travelling or even on holiday or during relaxation time. This sort of income-earning is popular with millennials who have been pushing the digital nomad lifestyle.

Invest at your own risk

Contrary to what these platforms sometimes advertise, no one can predict where the market is going, and you will need to take full responsibility of where you allocate your capital. Online trading can produce profits this much is true, but no platform can promise you continuous gains and no market is going to remain solid. Hedging your bets and allocating capital you're willing to lose is a much safer way of getting involved and dinging out if you have the temperament for trading online.

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Recommended reading

If you enjoyed this post and have the time to spend diving deeper down the rabbit hole, then we suggest you check out the following posts about improving your finances in South Africa.

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Tags: Online Trading, Investing

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