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In order to buy and sell stocks, you have a number of possible choices. We will cover most of these instruments over the next 6 sections of this manual. Basically, you have a choice of different instruments you can use to trade the trend index signals...
One of the easiest ways of trading stocks is in the traditional old fashioned way of buying and selling stocks. A stock is priced at $5, you buy 1,000 shares, they move up to $5.50, and you sell, for a $500 profit. Capital on this trade would have been $5,000 [1,000 shares multiplied by $5 original buy price].
Another way of trading is to take advantage of brokers 'margins' which allow you to trade the same stocks with less capital. We have already touched upon this. In the above example, you could buy the stock and make the same profit of $500, but instead of putting up $5,000 capital, you could put up just 25%, or $1,250 capital. this is known as 'margined' stock trading. Some brokers offer 25% margin, others 50% or 33.3% [one-third], etc. This is completely at the brokers' discretion.
Other ways of trading stocks is through CFD's and spread bets, as well as 'options', all of which we will cover over the next 6 sections of this manual...
Remember, how you trade the trend index signals is up to you - you may be perfectly happy with straightforward stock trading, or margined stock trading. Or, you may prefer to trade spread bets or CFD's, or indeed options. Learn as much as you can about these instruments, practice paper-trading using these methods, then decide which one you are most happy and at ease with. No matter which instrument you decide to trade, the key is to be on the right side of the market.
So, let's get started - beginning with straightforward stock trading...
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