Online Stock Trading Skills – What do You Need to Learn Today?
Buying and selling stocks online has become quick and easy through today’s technology and the real-time availability of information. Easy does not make day trading or other investing activities foolproof or less risky though. Determining what to invest in and when to buy or sell is where the skills investors develop come into play.
Sure, over time you will develop expertise from your experience and ability to identify the opportunities that will make increase your rate of success. But what do you need to learn today to ensure that winning decisions outpace losses before your capital is exhausted? Here are some key tips or rules of thumb to help you along the way to successful stock trading.
- Find a reliable online broker with a fee/commission schedule that is both reasonable and fits in with your budget. You will need a broker with who can provide the tools and information needed to make wise investment decisions and execute your trades promptly and consistently.
- Determine the capital you have to invest and don’t exceed that amount for your trades. As you realize gains from your investments your capital budget can grow with your successes. Don’t risk more than you can realistically afford to lose.
- Maintain patience yet perseverance. There will be losses. Don’t jump at every hot tip you hear in the press or from the “expert” next door. Use your own analysis and research to select the right investments for your particular strategy. Perseverance comes into play as you learn to deal with losses or what you perceive to be a lack of good opportunities. Keep looking for the investments that make sense to you, and don’t be discouraged by temporary setbacks or losses.
- Speaking of analysis – this is a critical skill and component of your investment strategy. There are many types of analysis tools and sources for information that will help you make – or avoid – your investment choices. Become familiar with several of the most common stock analysis charting tools to learn which may be of most value to you. Investopedia can provide some basics in types of analytical charting and interpreting the information they provide. com also presents a number of options for analytical tools even those designed for mobile users.
- Learn the terminology. Stock trading and online investing can be intimidating until you understand it. Experience will be a great teacher but you need a basic understanding of some basic terms such as:
- Earnings per Share – EPS
- Price to Earnings Ratio – P/E
- Projected Earning Growth – PEG
- Price to Sales – P/S
- Price to Book – P/B
- Dividend Payout Ratio
- Dividend Yield
- Book Value
- Return on Equity
Stocks.about.com offers considerable detail to familiarize yourself with each of these terms and you will quickly determine which measurements are the most applicable to your investing strategy.
Also learn to read and understand basic stock ticker information. This information is readily available on many web sites or online broker sites – even on mobile devices. It is a quick reference to how individual stocks stand at a particular point in time.
- Keep a log or journal. One of the best aids for making future decisions will be review of your past investments along with the related results. You should log what your buy decision was, price, total investment, any fees or commissions applicable, and even some notes on why you made the choice to invest in that particular asset. When selling record the same kinds of information to track your gain or loss along with why you sold at that particular point in time.
- There are many books and eBooks that are packed with investing advice from the best financial minds in the investing world. Their insight can arm you with invaluable information on how they built wealth successfully and what pitfalls they experienced and learned from. A great reading list is available from Stocktrader.com.
- Turn off emotions. Don’t let personal opinion of a particular company or stock get in the way of a financial decision that is likely to produce gains. Similarly, don’t sell due to a company’s actions that you disagree with personally if you anticipate a profit from retaining the stock. Finances and emotions just don’t mix. Also leave your political leanings out of the equation.
- Diversify, but within limits. You certainly don’t want to focus on one particular stock or even one market segment (all investments in technology stocks, for example). That exposes your holdings to unnecessary risk. On the other hand spreading yourself across too many stocks or markets makes your portfolio more difficult to keep track of, and may contribute to lack of focus making you more likely to suffer losses or miss opportunities.
- Learn to monitor online news sources for activity or indications of political unrest or natural disasters that may impact your particular investments. Many online brokers connect with such news sources to make it simpler for you to monitor business, financial, or world news that you want to be aware of.
Your investing results and logs with help you learn from your successes and mistakes. Over time your experience will provide increasingly positive investment results. Using the tips and skills listed in this article will prepare you for success whether you’re a beginning investor looking for long-term gains or day trading.
Use an Online Broker who offers the Tools and Technology that Meet Your Needs
Arming yourself with up-to-date information and comprehensive charting methods is critical to determining the optimal strategy for your investing goals. Selecting an online broker that provides the tools that enable your investment decisions, execution options, support, and reliability will enhance your opportunity to become a successful investor. These tools may include simple stock tickers, financial news feeds, and sophisticated stock analysis and modeling. SureTrader is a leading online broker for day trading that can provide you with advanced technical capabilities and support for your trades, including complete fast order execution and mobile options for traders using both iOS and Android devices.
Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.