Online stock trading
…(or even stock futures trading) follows the same principles as traditional offline trading as far as the basics are concerned. You are still buying or trading the same stock instruments from the exact same stock markets.
The difference with online stock trading is that you no longer call into your broker to place your trade or for information. Instead, you use your computer (with a fast internet connection) to log on, analyze the markets, view your existing stock portfolio, and make your stock trades totally via the internet. In online trading, there is NO need to talk to anyone at all, if you don’t wish to.
Here are some of the main advantages of trading stocks online:
- Pay less in commissions by using a Discount Broker, because you are not paying for telephone trades or unnecessary research.
- Rapid trade execution. You do not have to wait for your broker to execute the trade for you. You can buy or sell the stocks directly online with just the click of a mouse.
- Make smaller share purchases. This opens up the market to more people who cannot afford to invest in large positions.
As a result of all this, online stock trading does not require a large financial stake to be able to participate in the stock market. These are just some of the advantages to trading online.
However, there are some disadvantages. Computer breakdown is a real risk, and tends to happen when you can least afford it, i.e. you have an important trade on. The reliability of your phone line is obviously critical too, and these are particularly vulnerable during or after bad weather.
Online Stock Trading: How To Start
The steps to commencing online stock trading differ according to your experience level. If you have offline trading experience, it is a relatively minor switch to go to online trading. If you are completely new to market speculation then you will have to start from the very beginning.
First of all, you have to decide if online investing is right for you in the first place. Online stock trading is not for everyone. If you’re a timid person, a poor or slow decision maker, or if you are unsure or lack confidence in yourself, then stock trading is probably not for you, either online or offline.
Then you are going to have to set aside a sum of money to invest into your trading account. You then open a stock trading account with a stock broker online. Check out a number before you do this, in order to compare dealing costs, trading platforms, the specific securities you can trade, and other such issues that vary widely from broker to broker.
There ARE risks in Stock Trading!
Remember that real money is at stake – YOUR money! Hence, it is critical that you learn as much about investing as you possibly can. The more you study and learn about the subject in general, the better you will grow at trading online and the more successful you can be.
All that said, one of the key advantages to online trading is that you can trade smaller share sizes. Hence, there is less risk involved if you begin like this. Then you can work your way up to larger positions as you improve and your account size grows. If you feel that stock trading is outside of your capabilities right now (if for no other reason that the minimum account size permissible is quite substantial), then you could consider Forex Trading instead, because the minimum trade size is very small.
In conclusion, there are strong benefits to online investing. Trading online gives you the chance to work from home, take personal control over your investments, and engage in a fascinating activity, all at the same time. It can be very rewarding to do your own investing and fun to do from the comfort of your own home. Hence, stock trading is a worthwhile and valid business model.
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