The Online Revolution: How the internet opened up the financial markets
The financial markets, like so many things, used to be inaccessible to the masses. That doesn’t mean the average person couldn’t invest in stocks et al. However, due to the way the financial sector was set up, the barriers to entry were beyond the scope of someone without specialist knowledge or access to someone with specialist knowledge. Today, things are different. The internet has opened up the market, lowered the barriers to entry, and made everything more accessible.
The data backs up this point. The leading online platforms have upwards of 1 million monthly users. Some of these users are traders, some are investors. We’ll discuss the differences between trading vs investing along with the basics and the goals of each in a few moments. However, the point here is that the financial markets are buzzing with activity thanks to the internet.
The Internet Builds a Bridge
Driving this change, as we’ve said, is the internet. There are more than 5 billion internet users around the world. Not all of them make financial investments. However, any adult with some spare money could if they wanted to. That’s the important point and one we need to unpack so you can take advantage of the resources available. In simple terms, online trading platforms are run by brokers. These brokerages act as bridges between you and the financial markets. They open the door to stocks et al and, for that, they charge certain fees. The good news is that the fees are low.
What’s more, brokerages have the ability to dictate certain trading conditions. This means you don’t have to trade in the same way as professionals. In practice, you can invest small amounts and make use of features such as leverage and stop-loss limits. Because online platforms have lowered the cost of investing and made the markets accessible via desktop and mobile devices, more people are buying and selling. However, that’s not the only reason people are using the internet to make financial moves.
A Well of Information
Modern platforms contain a wealth of resources. For example, if you’re a complete beginner, you can use an online platform to learn the differences between trading vs. investing. These terms are often used interchangeably (we’ve done it in this article). However, when it comes to the technicalities of the financial markets, these terms refer to slightly different things. Investing generally refers to the process of buying something and holding it for a long period of time. In other words, it’s a medium to long-term investment. Trading is more active because you’re buying and selling with the aim of generating profits in the short term.
You need to know the differences between trading and investing before you enter the financial markets. Once you’ve picked your strategy, you need a plan. That’s where trading charts, news articles, and technical indicators come in. However, what’s also unique about trading online is the fact you can follow professionals. You can do this manually by watching social media feeds and subscribing to daily email updates from established traders and investors like Bill Ackman.
You Can See How The Professionals Operate
You can also use auto-follow tools such as CopyTrader. These tools automatically mimic the trades of people you follow. The software adjusts the size of your investment so you’re not spending more than you can afford. However, the benefit of this type of trading tool is that you can follow and copy professionals. This doesn’t mean you shouldn’t learn the basics of trading. However, copy trading is a proverbial leg up. It’s a helping hand. This is why online trading has taken off and, importantly, why it’s opened up the financial market to non-financial types.
Trading and investing carry a certain amount of risk. The internet hasn’t made it a sure-fire way to make money because the financial markets are unpredictable. However, if you take advantage of the resources out there, apply yourself, and invest wisely, there’s potential in the financial markets. That’s the real benefit of the internet and why we’ve seen an online trading revolution over the last two decades.
