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Popped in for a
coffee, which cost me
10K. However, the boys
did throw in a free
Audemar...

Peter E

Time for online trading

Fine watches usually hold their value better than more middle of the range brands and so can make good sense financially, as well as being an elegant timepiece. As there are many dealers in the leading names, there is a reasonably liquid market for trading these watches. The dealers obviously make their profit from the difference between the price they will buy a watch for, and the price they will sell it for. In financial markets such as the stock markets, these are known as the bid and ask prices. The bid price is what a dealer is prepared to pay for something, and the ask price is what they are asking for, in order to sell whatever it is they are dealing in. This is known as the spread. Of course the market for previously owned watches is not as liquid as those for shares, currencies, commodities, options and futures. Also a watches value is usually steadier over a period of time. This is good for the owner of a premium watch but if you wish to speculate, then online trading in financial instruments provides more opportunities to do so.

A decade or so ago, it was a lot harder to get involved, with commissions for traditional stockbrokers at levels that made it prohibitive for the smaller investor to participate in the stock markets. There was no retail foreign exchange market, and the interbank currency markets usually deal in positions of five million dollars upwards, making them out of reach for most individuals. Nowadays it is possible for the smallest of investors to trade in pretty much anything they want to. If you have an opinion about the future direction of the price of pork bellies, you can speculate on it. If you are following the price of precious metals such as gold or silver, you can have a stake in that market too. If you don't have the time to research individual companies' financial history and prospects, then it is possible with online trading to invest in exchange-traded funds, which are usually composed of a basket of securities that track the value of an index, such as the S&P 500.

With these you can back your broader view of where you think the market as a whole is going, rather than speculating in the fortunes of one particular company. There are many brokers dealing with the retail foreign exchange market if that appeals to you. They provide live price feeds that are representative of the spot interbank market rates. Being an OTC market, there is no central clearing house as such, so it is important to choose your broker carefully. A good one will be a member of the National Futures Association, a self-regulatory organization covering this sector of the industry, so look for this information on their websites. With many of these markets, you can try the online trading software with a demonstration account before you risk any of your own money on live market positions.