Online Stock Trading Tips for New Investors

The Internet has made Dealing in Equities Fast, Easy, and Secure

There is money to be made in the stock market. Online stock trading services provide lots of information to assess stocks and learn how to trade wisely and privately.

Among the Internet’s most popular websites are online trading sites. Their popularity has grown due largely to the ease with which they allow customers to trade in the privacy of their own homes with greatly reduced commissions compared to professional stock brokers.

Points to Consider in Choosing an Online Stock Trading Site

Consider whether a discount or full-service broker is desired. Discount brokers are responsible only for trading. Full-service brokers provide other services such as broker-assisted trading that connect the investor with a professional broker for assistance. Expect some of these services to cost extra.

Understand stock market investment goals. Many people use the market to establish an online savings account for retirement. This is best left to financial advisors who are better prepared to manage money in a variety of investment vehicles. There is a certain comfort that comes from knowing that an expert is preparing one’s financial future.

Online banking is available, however. Often, they can offer better rates for ordinary savings and are certainly worth investigating for establishing a regular savings account.

Compare online stock trading sites. One doesn’t have to use them all – there are ample sites on the Internet that compare them for you. Online trading companies don’t all offer the same services, commissions, or stock evaluation tools.

Start slowly after doing homework. The stock market is no place for the uninformed. People get rich and people get poor on Wall Street. Even the big boys lose lots of money – being rich allows investors to take bigger risks. A $10,000 account doesn’t allow for many risks, so care and knowledge are essential for managing small accounts. There are lots of places to experiment for free by setting up a watch list of stocks to test your investment strategies.

Anyone inclined to have a problem with gambling is advised that online stock accounts can be just as tempting as Las Vegas. Trading is almost too easy. The temptation to invest it all in a “sure thing” can be great and disastrous.

Don’t get involved in day-trading. Stock market investing is a risky business and the variables that affect the stock market daily are many and often unforeseen. Day-traders rarely make a living on the market and often lose a bundle. Online investing accounts are for investors who can exercise patience and view the stock market as a way to enhance income or savings.

Don’t trade in an attempt to earn money to help with unexpected financial problems. Financial difficulties are a good reason to hold on to money rather than risk it on the uncertainty of the market.

Be informed. Online stock trading software might be a good investment.

Don’t be Drawn to an Online Stock Trading Companies by Trading Costs Alone

Most online sites have reasonable costs per trade – generally between $3 and $10. At these rates, trading costs are not much of a consideration and certainly should not be the deciding factor.

Depending on how much and how often one trades, maintenance fees or a tier-based trading structure that charges varying rates depending on the trading frequency or account balance may add expenses to the advertised charge per trade. Certain charges – like commissions – are generally tax deductible.

People who have used Internet stock trading sites can be a valuable source of information. Good information can be provided by customers – especially successful, experienced traders.

Check Internet ads or toll-free numbers to find out if the stock trading site offers a full line of services. Not all companies permit trading by Blackberry or I-phone, for example.

Online stock trading companies provide fast, secure, and convenient ways to start investing in the stock market. Trading costs are generally very reasonable. Most online companies offer additional services. Before opening an account, an investor should have some knowledge about how the stock market operates and how to evaluate stocks.

Stock market trading is not for everyone, and potential investors should evaluate their reasons for opening an account. Use all available means to appraise the online trading companies being considered.

Gut Feel Is Good, but Strategy Is Always Better

Once you have selected a good online stock trading site of your choice, you would begin trading. This is the time to have a strategy in place instead of playing it by gut feel always. There are several instances of people getting attached to the stocks they own. Even when such stocks fall, they keep on clinging to it. They do it in the hope that the stock will bounce back and rise again. Again, when a favorite stock rises, they continue to believe that it will keep on rising, but one day the stock corrects itself and the opportunity is gone.

Most smart investors go by the 10% rule. The number 10 could vary from even 2 or 3 to as much as 20, maybe even more. That would depend on the risk appetite of the investor. Let us understand what the 10% rule is. It stays that as soon as a stock you have grows in value by 10%, you will sell it, without hoping that it will rise even further. Again, when a stock’s value falls by 10%, you will sell it, without hoping that the fall will be wiped out soon.

Closing Thoughts

The success stories of great riches being made on the stock markets are like the tip of the iceberg. Below those stories are the countless untold stories who have burnt their fingers and lost their money on the stock market.

That is why you must go in with a certain degree of respect. Do not expect to rake in the millions within the first few days. Investment in stock markets requires days and weeks of laborious study and the display of immense patience over years before you can become one of the big winners.

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