What is trading in cash?
Cash Trading is an investment strategy that requires the investor to use securities only on the basis of cash. This differs from the margin trading process, where the investor uses the credit line extended through the broker. Thanks to the cash trading method, the investor only relys on the balance of his money account for the purchase of shares, bonds, commodities or other investment vehicles.
Many investors use what is known as margins as a means of carrying out shops in different markets. The intermediary will usually cooperate with an investor to set up an account of this type based on the total assets held by the investor and its general credit. This approach allows investors to use margles trading to obtain securities without the immediate use of all available cash reserves. In the event that those who have purchased assets will lose money rather than earnings, the investor is responsible for covering his assets.
On the other hand, an investor who uses the strategy of trading trades does not have to deal with the possibility that a large debt will be due to securities purchased on a margin. Since securities are paid at the time of purchase, the investor can freely hold these assets for any time he wants. In the event that the investor needs ready cash to buy more securities, it is possible to identify shares in a portfolio that do not perform expectations, sell these shares and use cash generated from sale to obtain securities that show more promising.
Opinions on the practicality of cash trading differ. Some investors and brokers do not support this approach, as cash trading can only reduce investment opportunities that can be performed in parallel. This effectively minimizes the potential for the investor to get the topThe return on their investment activities. Proponents of access to trading money note that this strategy naturally brings less risk than trading in margins, because even if the securities do not perform as expected, the amount of loss is limited and will not result in the creation of a huge debt obligation. Many investors tend to use a combination of both strategies and mainly operate with cash to obtain securities, while trading on a margin when cash reserves are temporarily low.