Online Stock Trading -
Is It Right For You?...
Online trading has exploded in popularity as telephone
charges and broker fees have collapsed and internet bandwidth has
soared. Combine this with the recent trend away from corporate
environments in favour of working from home, and you can see how
online trading has become both a viable business and an ideal lifestyle.
Online stock trading (or even stock futures trading) follows the
same principles as traditional trading as far as the fundamentals 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 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.
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.
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, online stock trading is definitely a worthwhile, profitable and
very valid business model.
