The first step is to decide if you need a full-service online stock trading brokerage or a discount service. Full-service brokers have their time and place but note that in the current competitive environment discount brokerage services tend to offer almost the same facilities as full-service firms. Make sure that you weigh all options before deciding which one is right for you.
You will be able to determine what resources are available, including research and help in making decisions, as well as the timeliness of the trades you may want to make. You will need to determine if the quotes on the site are in real time or delayed. Some online stock trading sites offer delayed quotes with which the price you buy or sell a particular stock may be different at the time of your transaction.
Accepting open orders is also important if you expect a price fluctuation throughout the day. For example, the ability to put in a buy order for a set number of stocks, if the price falls to a certain amount could be important to you later on. The same would be for a sell order placed with an stock trading website online. You want to make the deal but only if the price is what you specify.
Service Justify Trading Costs
By looking through an online stock trading site you can determine if the costs of making trades through the brokerage is worth the service they are offering. With competition really heated among the many online brokerage sites, prices have dropped considerably with many offering trade rates of $9.95 or less. Some sites offer one-and-a-half percent rate, with a maximum of $9.95. There is some full-service online stock trading sites that are part of a large brick-and-mortar brokerage that charge up to $30 per trade, justifying the charge by the myriad of services offered.
Be prepared, however as that per trade cost is for both ways of the deal. You will be charged when you buy the stock and you are charged again when you sell it. Each separate stock bought or sold is considered one transaction, even if you put the orders in at the same time. For example, you submit an order to purchase ten shares of each, of three different stocks, you will be charged the trade cost, times three. When you sell those three company's stocks, you are charged again, whether you made money or not.
Some of us use the terms stock ?investing? and stock ?trading? interchangeably. Trading also requires investment. But if you look closely, the two terms ? trading? and ?investing? will appear in different lights and with different connotations.
While trading is a quick and transient process, ?investing? implies a long-term process that involves patience and perseverance. We more often use the phrase real estate investment rather than real estate trading, because real estate implies ?buying and holding? the estate for some appreciable span of time. Real estate cannot be traded like shares in day trading. Similarly we do not say ?day investing?. We say day trading. Trading involves buying and selling within a short span of time. The element of wait is inherent in investment. You invest in the education of your children.
Though stock trading appears to be an alluring option for making quick money, most people fail to achieve their objective of becoming rich in short time. Rather than making money such people end up with losses.
It must, however, be noted that the reasons for failure to make money do not lie in the nature of stock trading itself. They lie with the traders. Stock trading, or, for that matter day trading is a full time business. It is not gambling. Stock trading is a very unpredictable business. If it could be predicted by rules, everybody would follow them and become rich. Of course, there are some basic rules, which must be learnt and followed to start trading stock. But ultimately it is like the game of cricket. The players do not know which side, at which angle or at what speed or height the ball will come. The successful cricketers develop intuition to deal with the approaching cricket ball.
As in case of any other business or game, you need to learn the ins and outs of stock trading. Stock trading needs investment of time and money to gain knowledge, skills and experience. These intellectual assets cannot be acquired over night. These virtues are necessary to evolve a quick and strategic intuition to deal with the sudden developments like the rises or falls in share prices, It must be noted that intuition comes in where the rules fail to work.
In order to be a successful stock trader, you need to have a killer instinct and an eye of a hawk. You need to be disciplined and resourceful. You need to learn to anticipate the trends and think ahead of time. Stock trading cannot be done on borrowed knowledge or tips and tricks of the experts, gurus and pundits. You need to develop your very own skills and responses to emergent trading situations.
Stock investing
As said earlier, stock investing implies long-term process. You have specific goals to achieve. While the traders try to ?time? the market by buying the stocks when they think the market has reached its lowest or selling them when it has peaked, the stock investors are usually not moved by such fluctuations. It must also be noted that since the market fluctuations are unpredictable, quite a lot of traders suffer losses. Billions of dollars are lost every year by the market? timers? who get the things done the wrong way.
Stock investors, on the other hand, wait patiently for weeks, months and sometimes even years to achieve their goals. It has been observed in a study on the performance of the Standard & Poor's 500 between 1926 and 1987 that the S&P 500 returned, on average, about 9.44% during the 62 years from 1926 through the end of 1987. It was, therefore, established that ?the overall direction of the stock market has always been up and it is likely to continue in that direction unless something very scary happens in the world.?
There are some time tested strategies to build up solid stock portfolio;
?Always buy the stock of well-managed companies and hold them for as long as they keep growing.
?Set aside some amount for regular investments and do not be affected by short-term market fluctuations.
?Try to always buy when the market is at its low.
?Reinvest your earnings to gain the benefits of compounding.
?Do not put all your eggs in one basket. Diversify your investment in at least 8-10 stocks.
?Start investing now. Do not wait for a better time to come.
Both Asi Sveinsson & Amit Malhotra are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Asi Sveinsson has sinced written about articles on various topics from Satellite, Investing and Trading and Satellite. For more information on getting started in Check out. Asi Sveinsson's top article generates over 2400 views. to your Favourites.
Amit Malhotra has sinced written about articles on various topics from Stock, Stock Market Crash and Investing and Trading. SogoTrade stock broker:How Sogotrade offers low commissions:. Amit Malhotra's top article generates over 18100 views. to your Favourites.