Stocks trading online may seem like a great way to make money, but if you want to walk away with a profit rather than a big loss, you’ll want to take your time and learn the ins and outs of online investing first. This guide should help get you started.
Find a Brokerage That Allows Online Trading
Buying stock isn’t like buying your average consumer product, like toothpaste or a pair of jeans. This is true for online stock trading as well. You can’t just use your debit card to buy a share of Apple stock. You need to open an account with a stock broker, also known as a brokerage account. Often, you’ll need to meet a minimum deposit amount to start investing with that broker. Most brokers allow customers to set up some sort of online stock account for trading via the internet, so make sure this is an option before you make your final decision on which brokerage you want to go with. The process of online trading is different with every brokerage, so you’ll want to look into the specific process for the brokerage you choose.
Develop a Smart Strategy
There are a variety of different investment strategies, and purchasing individual stocks generally isn’t the way to go, especially for beginning investors. If you’re looking for a way to buy stocks online because you want to purchase shares in a specific company you think is doing well, and this would be your first foray into investments, you might want to do some more research. From investment options like index funds, which are put together by experts specifically to perform in a certain way, to active portfolio management from a professional broker, you don’t necessarily need to buy and sell individual stocks yourself.
Understand the Different Order Types
Stock trading neophytes often thing of trading as mere buying and selling, but it’s more complex than that. For example, you can place a stop-loss order on a stock, which will allow you to purchase that stock when it hits a specified price of your choosing. Make sure you understand the different ways to buy and sell stock and that you know specifically what they’re called before you dive into trading without an advisor.
Do Your Research
No matter what kind of stocks you decide to buy, it’s essential that you do your research and understand what you’re getting. Annual reports from individual companies or performance reports on funds from brokerages are a first step. But you should also think about the potential future of the companies you invest in based on where they’re going. A company that’s doing great now might not do so hot in the future.
Exercise Caution
It’s important to understand everything associated with stock trading, from market fluctuation to fees and taxes, before you start investing money. This is not to say that you shouldn’t try to trade stocks on your own, but success in the stock market requires a lot of background knowledge and an understanding of the complex systems in which you’re taking part.
