Updated: Nov 19, 2020
Firstly, we need to understand that trading online with a CFD broker is different than buying and holding an equity/stock for a long-term investment.
Online trading is an instrument that allows the trader to enter the market for a short period and speculate on the movement of the stock, this could be for a week or as little as a day, as an example the Listed company producers its latest earning report.
Investing in a stock, either via a broker, bank, or pension fund, as an example is an approach that works on the buy and hold principle. Therefore, you buy and hope it rises over the years. Sometimes you also get dividends, depending on the sector.
When I had my first meeting with a financial advisor to discuss my pension, as long ago as 1990, we spoke about diversifying, consider buying property, individual stocks , mutual funds etc.., I would say property has been the best long term investment over the decades for me, but we are talking decades not years.
Therefore, long term investment with the assistance of a recognised financial advisor or financial institution would be the safest form of investing long term.
There was no CFD market then but with the advent of the internet, this industry has grown exponentially allowing retail traders, smaller players to play the market.
Trading online CFD’s for a beginner is much riskier but with the potential to enter the market with little capital.
The principle is the same, buy low sell high, although you can short in CFD trading.
To enter the CFD market needs discipline and time to learn, It would be naive to state it is easy but with the support of experienced traders, this could help you achieve a decent return in a shorter period of time.
Confused which broker?
We help new traders to discuss our recommended brokers, their fees and regulation, minimum investment and types of platforms.
To trade stocks online you need some technical skills, how to open the trade, as well as understanding fundamental analysis. However, both can be developed over time. A perfect mix of both comes with experience. The answer is in understanding and a clear knowledge of trading and investing. Do learn the fundamentals and develop skills and you will hopefully succeed and enjoy it.
It is a bit like marmite, you either love it or hate it.