Getting Started with Online Trading
What is Online Trading?
Years ago if you wanted to purchase stocks or other financial instruments such as bonds, exchange traded funds (EFTs) or commodities you had to find a broker that you could trust and open an account then begin placing buy and sell orders. This broker would then execute your instructions through placing the order through the exchange that manages your particular financial investment.
Today anyone with a computer and some financial assets to put forth as initial capital can invest in the stock market through using an online broker. Online trading has become a common financial investment tool with a number of online brokers available that provide varying levels of services at varying levels of fees and commissions. Basic steps to begin online trading are simple on the surface:
- Have some capital to open an account and purchase your first stock
- Select an online broker and open your account
- Make your choice for a first ‘buy’ order, and place it through your selected broker account
- Bask in the glory of being a financial wizard
Well maybe it’s not quite that straightforward, and there are prerequisites that should be followed before taking the financial plunge.
What Should a Beginning Online Trader Know to Get Started?
As with any endeavor knowledge arms the individual with considerable advantages. Take the time to familiarize yourself with basic investing and stock terms. There are many internet sites such as US News and Investopedia that can be accessed to become familiar with such terms as price-to-earnings (P/E) ratio, FOREX, futures, supply and demand, and many more.
Once you understand the basic terms you can apply them to your research of prospective investments. Yes indeed – research. There are very successful investors such as Warren Buffet who have exalted the philosophy to “buy what you know”. This logic means that if you’re familiar with technical products and the companies who produce what you perceive as high-quality items that will survive long term, you may want to invest in that company confidently. Another approach is monitoring business news on a frequent basis and judge for yourself events that you expect to impact a company’s stock value then jump at the opportunity to reap the benefits.
Risk is another important consideration especially for beginning online traders. You must understand that all funds invested in financial vehicles are at risk. Evaluate your tolerance for risk carefully but at the same time there is a rule of thumb that some investors live by similar to “no pain, no gain”. This implies that the higher the risk the greater the potential for gain. This may or not hold true for any particular investment so proceed with caution. Here again research and due diligence are critical to successful investing.
What’s Next for an Online Trader?
So now you have some financial capital, an online broker that you have carefully selected, and you understand some basic investing terms. Are you ready to start placing online trading orders? Actually you could, but there are other factors you should consider:
Analysis tools – there are many investment tools available from the familiar stock ticker to complex and sophisticated market analysis tools utilized by the most technically-savvy investors. You may choose to utilize multiple tools for different purposes or stick to one or two that fit your interests and prove to be useful for your particular investment strategy. Some of these tools are as simple as charts that illustrate current market trends or history of a particular stock. Others contain sophisticated formulas to predict future activity. Once you’ve become familiar with some of these tools you can determine those that provide you with reliable information for your buy and sell activities.
Selecting an Online Broker
Regardless of your strategy and tools that make the most sense to you, a critical component of your online trading is selection of your online broker. Brokers are the facilitators of all trading activity. Online brokers vary in many aspects:
- Fees and commissions charged – carefully evaluate and understand these critical structures
- Availability – are the services available 24×7 or only when markets are officially open?
- Tools provided – online brokers vary greatly on the tools available to clients. Be sure the online broker you select offers tools that are of value to your investment strategy.
- Speed of execution – how quickly will your orders be executed? This is particularly important to day traders who buy and sell over extremely short time periods of hours or minutes.
- Technology – many investors and especially day traders need access to their accounts not only at home or in the office but wherever they happen to be. This makes mobile applications for online trading critical to their investment activities.
- Support – does the online broker have support available when you need it or any at all? Support options also vary a great deal among broker services from 24×7 real person phone support to simple online FAQs designed for self-help.
Summary for Online Trading
Now that you have available capital, knowledge of investing terminology, and some familiarity with investment tools you’re ready to select a reliable online broker and start making profit. Happy Trading!
SureTrader is a leading online stock broker for day trading that provides clients with functionality and tools that enable traders to make intelligent and informed trade decisions. Features include sophisticated analysis tools with real-time stock tickers and support that is both courteous and available whenever day traders need it. SureTrader clients benefit from lightning-fast execution of trades even in after-hours trading maximizing investment opportunities. Accounts can be accessed when on the move through the use of online stock trading services enabled on multiple platforms. Technology available to SureTrader clients includes desktop and mobile options using both iOS and Android devices. Contact us right away to get started with online trading taking advantage of the best in online trading sites.
Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.