With a solid trading strategy, generate high returns within a short time in the form of capital appreciation and dividend income.
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When economies experience inflation, the prices of Equities tend to go up in long term.
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Here are some of the more frequently asked questions by traders.
Equities, also known as stocks or shares, represent ownership in a company. When you purchase equities, you become a shareholder and have a claim on the company's profits and assets. Bonds, on the other hand, represent debt, and the borrower (typically a company or government) is obligated to pay interest and repay the principal amount at maturity.
Trading equities can provide the opportunity for capital appreciation and the potential to earn dividends. The three main benefits of trading equities are - limited liability, high liquidity, and capital gains.
The value of equities can be highly volatile, and it can fluctuate greatly in a short period of time. Additionally, the company whose equities you own may perform poorly, or go bankrupt, leading to a loss of your investment.
To get started with trading equities, you will need to open a brokerage account. You can then deposit funds and begin researching and selecting the equities that you would like to purchase. Be sure to consult with a financial advisor or do your own research before making any investment decision.
Fees associated with trading equities can include brokerage commissions, account maintenance fees, and margin interest charges. It's important to be aware of these fees and compare them among different brokerage firms before you open an account.
Ownership of Asset: When you trade CFDs on stocks, you do not own the underlying asset, but rather a contract that tracks the price movements of the stock. With equity trading, you own the actual shares of the stock.
Leverage: CFD trading gives you the opportunity to trade using leverage, meaning you can control a larger position with a smaller amount of capital. This can amplify potential gains but also increase potential losses. On the other hand, Equity (Physical Stocks) does not offer leverage, which means you must pay the full price of the shares upfront and do not get access to any leverage opportunity.
In addition, CFD trading may have lower fees and commissions compared to equity trading.
Short (Sell) Positions: CFD Stocks trading allows traders to take short (SELL) positions, which means traders can take advantage of falling prices by selling an asset without actually owning it. In contrast, Real (Physical) stock trading does not allow traders to open short (SELL) positions, as a trader has to own the stock before he is able to sell it. Therefore, only long (BUY) positions are allowed on Physical Stocks.