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How to Use Plus500 in 2022 (The Ultimate Guide)
If you are looking to get into trading stocks, then you picked a very good time to do it.
Why? Because the world economy is not in the best place right now. But why is that a good time to get into stock trading?
There are two things you should know before you get into trading stocks, whether you are using Plus500 or any other stock trading app. The first thing to understand is that the economy of Australia—or any country, or the world—is not the same thing as its stock market (though some people act like it is).
The second thing you should know is that when the stock market recedes in value, that is not the world-ending calamity that it might seem to be. Many people see the stock market’s value shrink and get worried that people are losing money. But traders see that it is actually an opportunity to invest.
Even as the economy of Australia has seen better days (though it is by no means in dire straits) the Australian Securities Exchange (abbreviated as the ASX) is actually near a high for the last year.
Because the ASX is near its high, that means it will soon stumble down a bit. That is just how these things work. Why not strike while the iron is hot? To help you get your foot in the door when it matters most, we have assembled this guide on how to use Plus500, one of the best trading apps available.
Step One: Funding Your Account 💰️
You are not going to be able to buy anything without first funding your account. You have three main options for how to fund your account, and they all have their advantages and drawbacks.
Option #1: Credit or Debit Card 💳️
This method sees you transferring money to your account in the same way you might pay for something you are buying off of an online store. This is appealing because it is fast and convenient. In this case, you are basically buying money to put into your account. But it has a drawback that will come up a lot.
Using a credit or debit card will make it hard to transfer your funds out of your account. And perhaps more importantly, it will also incur service charges on adding funds to your account.
Option #2: Using PayPal
PayPal is a third-party online banking software that allows you to transfer funds much more easily, both to and from Plus500. It is easy to use, but it has two problems of its own: To begin with, it takes a fee of its own when you transfer your funds out of your PayPal account.
But the other problem is that in order to transfer funds out of your PayPal account, you have to link it to your bank account anyways. This is why we recommend the last option for funding your account.
Option #3: Using Your Bank Account 💵️
Linking your bank account to your Plus500 sounds more complicated than it is. The first step in doing it is giving Plus500 your bank state branch number and account number. This will allow them to find your account. But then, you must verify your account. Here is where some people get confused.
Plus500 will send you two deposits worth less than a dollar each, and then subtract everything they sent you. You must verify your account on the app or website by filling in the value of the two deposits.
So, if they sent you a deposit of $.56 and another of $.22, then subtracted the $.78, you will fill in that the first deposit was $.56 and the second was $.22. Exclude the amount they subtracted.
This is the best method for funding your account since it comes with no service fees and allows you to transfer money out of your account easily. You just have to get through that initial verification process.
Step Two: Buying and Selling Stock 🛒️
There are actually many different kinds of securities available through Plus500, but we are going to begin with talking about the most popular one: Shares in companies, also known as “stock”.
Plus500 helps you out a lot with buying stock. The first thing you will need to do is find a stock to buy. You can do this in a few ways. The easiest is by consulting an “ETF” or “exchange-traded fund”.
ETFs are indexes of different stocks, usually within a single industry. These make sorting through a particular industry easy. Plus500 also gives you the ability to sort by the price of each stock, as well as how much that stock’s price has moved in a given day.
Once you find a stock that looks appealing to you, the interface will show you its price history and a few interesting tools. The tools you will find the most useful are the analysis tools and the notifications.
Using Analysis Tools 🔎️
We will not plunge into the depths of how to analyse a stock price, but we will give you an idea of how to use Plus500’s tools to make a good investment. First, starting with the draw tool. This is a simple tool for drawing on the chart that shows the history of the stock’s price over time.
Next, expand the price history to include the last one to three months of prices. Three months is preferable, but one month is all you need if you want to avoid overloading yourself with information.
The next step is the simplest: Find all the points where the stock price reached its lowest before going back up. Draw a straight line from left to right that intersects with as many of these points as possible.
This is called the “demand line”, and it represents the base level of demand for a business.
Then, draw another line that intersects with where the stock reached its highest before going back down. Again, try to intersect with as many of these peaks as possible while keeping the line straight.
This is the “supply line”, which represents the company’s ability to meet that base demand.
Once you have picked a stock and found where its supply and demand lie, you have a pretty good idea of when it is a good idea to buy low and when it is a good idea to sell high. You can use Plus500’s alerts to give you notifications when a stock has gone up or down by a certain price or to a certain price.
Using Trading Tools 📊️
The two trading tools you will be presented with are exactly what you would expect: Buying and selling. But there are a few more than you should know about, as they are important for trading precisely.
Once you buy a number of shares in a company, two things will happen: It will either get more expensive, or less expensive. If it gets less expensive, then you may want to close your position before it loses too much value. For that, you should put in a “stop-loss” order.
A stop loss is an order that says you will sell your shares once the price of each individual share goes down to a certain threshold. So, you might buy five shares at $5 each, then set them up to sell if they drop down to $4.90 each. This means you will take a $.50 loss but save you from losing any more.
On the opposite side of the coin is the “limit order”. This is an order that sees you selling your shares once they reach a certain price above what you paid. If you buy five shares at $5 each, you set them up to sell at $5.50 each. That way, the moment someone is willing to pay that price, you sell.
These tools are important for selling the moment the price you want becomes available. After all, you never know how long a stock will stay $5.50.
Step Three: Other Securities ➡️
Stocks are far from the only things sold on Plus500. You also have access to foreign currency, commodities, options, and CFDs. In general, these are all more complicated to trade, not to mention far more prone to risk. Options and CFDs in particular are known for 70% of new traders losing money.
This is where Plus500’s knowledge base comes in handy. You can find their knowledge base on their website under the “trading” tab. Select “trader’s guide” to find out how to trade more effectively, as well as how to trade riskier securities. Use their “news and market insights” to inform your decisions.
Plus500 is one of the most beginner-friendly trading platforms available to Australians. It connects you to tons of companies, different markets, and a variety of securities.
This means you have a lot of tools you can use to optimize your trades. But the most important thing to trading well is the fundamentals.
Do not risk too much of your money at once. Have an idea of what you are trying to buy and what you plan to sell it for. Avoid trading in securities you do not fully understand. Do this, and you will get far.
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