invest and speculate

invest and speculate

Meet two different faces of the financial world: the markets are a dazzling world that offers endless possibilities and, consequently, a huge variety of trading strategies that can also be automated with various tools.

Regardless of whether you are an experienced investor or a professional who has just started in this world, the reality is that everyone should choose a strategy according to their concerns and, of course, their possibilities.

Therefore, one of the main decisions that must be made is whether to invest with a broker (or directly in the stock market) or to speculate with  online trading.

While both can complement each other, both require at least a basic knowledge of the markets, as their nature is quite different.

That is why many investors with less experience or who do not have ample resources decide to opt for speculation.

Should I invest in the stock market or speculate online?

Investing in stocks the traditional way

invest and speculate

When you buy a stake in a company, you will basically keep your positions open for long periods of time. These periods can expand to months or even years, mainly as a result of studying the fundamental factors that affect markets. Being informed is the key to investing.

For long-term investors, more capital is usually needed at the beginning, as most investors believe their positions must withstand or “overcome” a series of changes in the market during the time the position is open.

The idea behind long-term trading is to build returns gradually over a period of time. Likewise, diversification is key: a negative quarterly balance sheet or big news that sends the markets shaking (as happened, for example, when the Volkswagen scandal crashed) can ruin the value of a patient, long-term investment in a day.

Speculation

Why am I “speculating” when opening or closing a deal? What do I need to know before trading CFD online?

Those who like giddiness and immediacy will no doubt choose daily speculation on the markets.

This is because any relevant political announcement or economic information of interest can open a huge window of possibilities that investors who enjoy the volatility of CFD's will exploit to the fullest.

That is why when deciding to buy or sell a particular instrument, one must take into account whether or not there are “forecasts” of volatility.

The investor who likes to speculate pays attention to every minute and can make substantial benefits in a very short period of time.

The classic investor who trades the markets takes it easy and looks to the future; day-to-day speculators open and close positions in minutes… or even seconds.

So, buying and selling is almost a reflex for many speculators who seek even the most minute moves during the day to create their own benefits.

Another advantage of speculation is that traders will not incur interest on deals opened overnight (refinancing fees), thus eliminating this extra cost.

Benefits are selected and stops are used to help traders and brokers manage their entry and exit from the markets, as speculators often place many trades, one after the other, in the same session.

Due to the fast paced nature of speculators, they do not always study in depth and calmly analyze data and trends.

Speculators base their trades more on what's to come (live IBEX 35 evolution, for example), using last 5 minute charts to invest quickly without thinking too much about the long term.

Why do so many people speculate on the markets?

Things usually don't work out as they are told in the movies. When you start a business, money doesn't move by itself, which is why it's important to regularly monitor your investments.

The speculator's work is dynamic and never ends: there is always fundamental analysis and technical data ready to modify a value.

That's why it's enough to open a position and wait for the right moment to close it. This does not happen if we decide to invest in the traditional way, as information is not available anytime and anywhere.

It is important to pay attention to the set of key questions about the differences between speculation and investment:

Is it easy to start speculating with CFD's?

At many brokers, there are tutorials and articles of interest available to all traders.

No prior financial training is required to start trading the markets. Nor is a large amount of money required to start trading CFDs.

In addition, you can choose the option of leverage, but it is necessary to take this “loan” seriously.

In summary, the stock market or traditional stock market is certainly the place for those who want to invest thinking in terms of longer term and more specific markets, while CFD trading is perfect for small and medium investors who want to trade in the markets worldwide, such as trading digital currencies or Forex.

If you are in the second group, the brokers below are the ideal place to speculate on the markets.

$ 100.000
Free Demo
*Your capital may be at risk
Investing in Forex, CFD and FX options involves substantial risk of loss and is not suitable for all investors.
  • Large selection of trading instruments
  • Multiple Regulations
  • Various International Awards
$ 100.000
Free Demo
*Your capital may be at risk
Investing in Forex, CFD and FX options involves substantial risk of loss and is not suitable for all investors.
  • Regulation Broker With Good Reputation
  • Copy Trading
  • Allowed Hedging in Trading
50%
of Bonus
*Your capital may be at risk
Investing in Forex, CFD and FX options involves substantial risk of loss and is not suitable for all investors.
  • Minimum deposit for entry
  • Free demo account
  • Many teaching tools
$ 10.000
Free Demo
*Your capital may be at risk
Investing in Forex, CFD and FX options involves substantial risk of loss and is not suitable for all investors.
  • Intuitive Trading Platform
  • Fast Withdrawals
  • Low Minimum Initial Deposit Requirement
$ 10.000
Free Demo
*Your capital may be at risk
Investing in Forex, CFD and FX options involves substantial risk of loss and is not suitable for all investors.
  • More than 100 assets to trade
  • Fast Withdrawals
  • Award-winning high-tech platform

Comparative table collecting the main differences:

Stock Exchange vs CFDs

Features Stock exchange CFD
Accessibility Restricted by geographic limitations, available capital and trader's margin. Depending on the operator, but generally inferior to traditional brokers.
Commissions High, due to the cost of carrying out small operations. Depending on the operator, but generally lower than traditional brokers.
Restrictions Many markets impose restrictions on opening in the short term and some do not even admit the possibility. No restrictions for short opening, nor for the duration of a trade.
Leverage Brokers offer an average of 1:2 for stocks and 1:15 for futures. Leverage of up to 20:1, which gives investors with less capital more possibilities.
5 / 5 - (5 votes)

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