We’ve spoken before about what online trading is and how it is providing business-minded Africans a way to do business in the international market right from their computers, laptops or smartphones. (Read article: What is Online Trading?)

And last week, we wrote about the two questions to ask yourself before you start a business in online trading. We focused on assessing your strengths and weaknesses and leveraging these to bring you success in the financial market. (Read article: Two Important Questions to Ask Yourself Before Starting any Business)

In this post we will talk about some of the fundamental concepts in online trading.
These are the terms and concepts all prospective online traders need to know. They form the knowledge foundation for everything you do in your trading business.

Here are three fundamental terms to know in online trading.

The Global Financial Market is the worldwide market for the trade of financial products. It is comprised of different individual markets, such as the capital market (where long-term assets such as stocks and bonds are traded), commodities markets (for commodities such as gold, silver and oil), Money Market (for short-term investments), Forex market (for the exchange of currencies), just to mention a few.

Since this market is the combination of all other financial markets in the world, investors are more exposed to a diverse range of financial assets and products, that may not be readily accessible within their home markets.

Due to its vast nature, this market undoubtedly presents greater opportunity for doing business.

Financial Instruments are basically financial assets that can be traded. The three most commonly known financial instruments are Forex, stock and bonds.

Forex refers to the buying and selling of currency. This is the largest single financial market in the world, and as such is the financial instrument of choice for most traders.

Stock simply refers to a share in a company’s assets. Owning stocks in a company is basically owning a piece of that company. 

Bonds are debt investments issued by companies or governments to raise money. Buying a bond is lending money to the company or government issuing the bond.

An online trading platform is any software used to buy and sell financial instruments and assets over the internet.

Trading platforms allow investors to access the Global Financial Market through the internet, making them a must-explore option for business-minded individuals in our part of the world who want to tap into bigger opportunities out there.

Various financial assets can be accessed via different platforms. Our platform, the FabTrader, for example, offers access to 9 markets and over 30,000 financial assets. This empowers traders to diversify their risks by owning the right investment mix. FabTrader also offers the opportunity to trade over multiple devices with the same account.

The right trading platform is critical to success in online trading. The wrong platform could severely limit your potential in trading; therefore you should choose the one that’s best for you.

Understanding these three terms are the early building blocks of a successful online trading business. It’s a good idea to bookmark this page and refer to it as and when you need to in your online trading journey.

This email address is being protected from spambots. You need JavaScript enabled to view it.