Trading Stocks Online

Sanford By Sanford, 5th May 2011 | Follow this author | RSS Feed
Posted in Wikinut>Money>Investing

Trading stocks online as a self trader takes patience and experience, it's not for the faint of heart. It can be rewarding and addicting once you have master the art of trading in stocks.

Stock Trading Online

By Sanford Hall

Trading stocks online can be rewarding in many of ways. It takes a lot to do this since you are putting your hard earn cash up to exposure of loosing it all. Risk versus reward is the name of the game. I have traded stocks online for the past fifteen years. In the beginning I lost quite a bit but I have since made up for my losses by making thousands in return on a yearly basis.

Trading Stocks Online means trading in stocks online. Stocks can be anything, the trading can be done is shares, bonds, private equities, government equities, mutual funds, futures and options. One can trade in any one of these or multiple of these. Stocks trading is advantageous in today’s world. This is because if one wants a comfortable life, one has to have an alternative form of income apart from their normal salary income. This income can be gained from stocks trading. It can be highly lucrative if you know the ins and outs of the trade. It can help you earn a massive amount of wealth. Usually stock trading can be done by yourself or through a broker. Brokers are the banks which deal with trading and where you have to open a trading account. Brokers charge certain fees for their assistance called commissions. These fees can vary from broker to broker. I for one suggest to use an online broker with minimal fees and a reputable reputation such as the one I use here.

Online trading has numerous benefits. You can buy and sell stocks anytime and anywhere. You just need a computer and internet connection. You also need a basic knowledge about stocks, what are they, how do they works etc. If you are a follower of the stock market, then you should understand it easily. But if you are not and want to be one, then you have to start seeing the trends of the stock market. Initially there may be a problem in understanding, but as when you trade, you will learn. Online trading helps in educating about various stocks and their prices. All the prices are listed on the site. Also, all the Initial Public Offers(IPO) of various countries are listed on the sites. You don’t have to take the pain of physically knowing the cost of the offerings.

Here are five important steps in trading stocks online by yourself

1) Listen to the charts

You may have found a great stock, and it could have the best fundamentals in the world, but here's the truth-- that's not enough! Even if a stock has a million fundamental reasons to go up, it's not going anywhere unless people are buying it. People don't always act rationally, so you can't assume that a stock will behave as it should. That's where technical analysis (chart reading) comes in. By learning to read charts, you can spot stocks that are poised to move up, or conversely, stocks hopelessly headed down. Reading stock charts will allow you to find stocks which actually will move up, not just stocks you think should move up.

2) Use stop losses

No one is ever right 100% of the time. That's just the nature of the game. Even the best stock pickers sometimes pick lemons, but that's not necessarily a problem. Picking losers, which is inevitable, is only a problem if you let them kill your account. You absolutely must set stop loss orders every time you make a trade, otherwise you may wake up and find your entire account decimated. Remember, to make money trading stocks online, you don't always have to pick winners-- your winners just have to be bigger than your losers. You accomplish this by always cutting your losers early, and then letting your winners run.

3) Don't step in front of a speeding train

One of the biggest myths about making money by trading stocks online is that you have to buy low and sell high. That's a very dangerous way of thinking. Why? Because people, searching for stocks to buy low, eagerly buy stocks which are spiraling downward. They hope, often falsely, that soon after they buy the stock, it will turn around, go higher, and then they can sell for a profit. But ask any experienced trader and he'll tell you that stocks which drop precipitously tend to keep dropping. Don't step in front of a speeding train. Instead, find stocks which are healthily moving up and will keep moving up. Think of it not as "buy low and sell high," but "buy high and sell higher."

4) Ignore the people on TV

There is no shortage of media personalities who love to recommend stocks. Follow their advice and you'll become rich, right? Wrong. If you could make millions by following the guy on TV, everyone would be rich. You've got to do your own homework. You see, it's not necessarily that the people in the media don't know what they're talking about. They often do. It's that by the time that information reaches you, it's too late! Think about it...there are professionals who spend all day looking for the next great stock to buy. Do you really think that by the time a stock pick reaches the general public on TV, the smart money hasn't already bought it? Of course it has, and by the time the little guy buys himself, he's left holding the bag. If you want to make money trading online, you've got to think independently. Otherwise, you'll be behind the curve.

5) Don't overpay on commissions

Let's say you start trading stocks online with one thousand dollars. Now let's say you're paying ten dollars per trade. And finally, let's assume you make thirty trades per month. If you do the math, you'll see that you're doomed regardless of how good your stock picks are! People often get so excited about trading stocks online, they forget about all the money wasted on commissions. If you want to be successful over the long term, you have to find a broker with low commissions for your trading style. With some brokers charging as low as one penny per share, there's no reason to waste all of your money in fees. In this way, researching online brokers is just as important as researching stocks. For more info. about trading visit our site for helpful info.

Tags

Dow, Nasdaq, Stock, Stock Exchange, Stock Images, Stock Market, Stock Market Index, Stock Market Investment, Stock Market Investment Strategy, Stock Market Trading, Stock Markets, Stock Offering Price, Stock Offers, Stock Photography, Stock Trading, Stocks, Wall Street

Meet the author

author avatar Sanford
I am a stock trader and love to write on the stock market or public traded companies throughout the world. Feel free to follow me at www.alexastock.webs.com

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Comments

author avatar Delicia Powers
5th May 2011 (#)

Wise advice, thanks!

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author avatar Songbird B
5th May 2011 (#)

Sanford, this is so clearly written, that even someone like myself who knows nothing about stocks and shares and trading, can grasp the basics. Such wise words too...This is a great share my friend.

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author avatar Jonathan
5th May 2011 (#)

Very good advice, thanks for sharing.

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1st Jul 2011 (#)



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13th Jul 2011 (#)


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