Beginner’s Guide to Online Trading

Online trading permits investors, whether beginner or seasoned, to send trades quickly to the stock exchanges. What you do with online trading is to log into your online account, do some research, complete a trade ticket and in few seconds you will get a trade confirmation. This type of trading is recommended to a person who is self-directed and who loves to do trading on his own and who likes to be in charge of his investment portfolios.

Before you engage in online trading, however, you should know some basics of it. Below are the things you should know about this type of trading:

Facts

Wealth management units of most major banks as well as independent brokers offer online trading. These units are known as discount brokerages as their trading fees are normally less than half of that of full-service brokerages. Such units can afford low fees because they do not give investment advice and do not employ full-time research analysts and portfolio managers on staff.

Account

You should open an account to use. Opening an account is a simple process. Visit a website or an online broker, fill out an application form and within a few days, you will get an account number as well as the password. guide to trade online After that, familiarize yourself with the online platform, setting up electronic funds transfer or the so-called EFT forms and then wire some funds into your bank account in order to begin trading.

Research and Strategy

Research and an investment strategy are needed when you want to succeed in online trading. If you are a beginner, you can start your research with online investing and trading resource centers of the SEC. You have the responsibility to conduct your own research because you have nobody to blame if your investment goes sour as there will be no one at the online brokerage that will advise you to purchase or sell anything.

In terms of strategy, your investment style and time horizon will define the way you trade. In case you are retiring in 30 years, you will probably be prone to less risk-averse and tend to be overweight in stocks. In case you are retiring in five years, on the other hand, you will be overweight in less-risky and fixed-income assets that pay regular interest. In addition, volatile stocks or options are not recommended to people who are worried about stock price moving irregularly.

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