Ten Facts You Might Not Know About Online Stock Trading
Gone are the days when traditional brokers were needed to play the stock market. Nowadays, online stock trading can be done quickly and easily with the click of a button. Trading online has become a fully automated process so that average investors can buy and sell stocks for their own brokerage, mutual funds or retirement accounts. Here are some helpful facts to consider before investing.
1. It's easy to do.
Trading is open to anyone with an internet connection. All you need to do is open an account with an online brokerage like optionsXpress, Fidelity or E*Trade. Once your account is set up, you can begin trading.
Trading is open to anyone with an internet connection. All you need to do is open an account with an online brokerage like optionsXpress, Fidelity or E*Trade. Once your account is set up, you can begin trading.
2. It's convenient.
Trading online can be done around the world, 24 hours a day, 7 days a week, in all kinds of global markets. All you need is an internet connection and any applicable trading software.
Trading online can be done around the world, 24 hours a day, 7 days a week, in all kinds of global markets. All you need is an internet connection and any applicable trading software.
3. You're in the driver's seat from day one.
You have control over where you put your money, which can be both a pro and a con. Novice investors may need to spend more time doing more investment research and getting the right facts and data to make the good investment decisions. Fortunately, many online brokerages provide online tools and information to help investors decide where to invest.
You have control over where you put your money, which can be both a pro and a con. Novice investors may need to spend more time doing more investment research and getting the right facts and data to make the good investment decisions. Fortunately, many online brokerages provide online tools and information to help investors decide where to invest.
4. It's cheap.
Online trading has eliminated the need for a live stockbroker, so investors can save on the price of commissions. Online trading companies have low fees for trading, many of which are less than $5 per trade.
Online trading has eliminated the need for a live stockbroker, so investors can save on the price of commissions. Online trading companies have low fees for trading, many of which are less than $5 per trade.
5. There may be hidden costs.
Although trading costs may be low, you still must consider any associated hidden costs. You will need to read the fine print to make sure you have all the facts. It may state that you may need to keep a minimum amount in your account balance. With a low-cost broker may come subpar customer service, not to mention the lack of financial advice from a live person. You're pretty much on your own, so any trades you place are your responsibility – and some mistakes may cost you in the long run.
Although trading costs may be low, you still must consider any associated hidden costs. You will need to read the fine print to make sure you have all the facts. It may state that you may need to keep a minimum amount in your account balance. With a low-cost broker may come subpar customer service, not to mention the lack of financial advice from a live person. You're pretty much on your own, so any trades you place are your responsibility – and some mistakes may cost you in the long run.
6. It's not a get-rich-quick scheme.
This is certainly no get-rich-quick venture because the failure rate for first-time investors is pretty high, and many people may get out of the market within the first year of trading. Inexperienced investors without the right facts tend to underestimate the amount of time it takes to research stocks and are likely to make many mistakes in the beginning. Becoming a successful online stock trader takes time, patience and discipline.
This is certainly no get-rich-quick venture because the failure rate for first-time investors is pretty high, and many people may get out of the market within the first year of trading. Inexperienced investors without the right facts tend to underestimate the amount of time it takes to research stocks and are likely to make many mistakes in the beginning. Becoming a successful online stock trader takes time, patience and discipline.
7. You need a good plan to succeed.
Anyone who invests should include both short-term and long-term financial goals in order to succeed. Having a plan and a strategy to get there will help you weather the storms of the market.
Anyone who invests should include both short-term and long-term financial goals in order to succeed. Having a plan and a strategy to get there will help you weather the storms of the market.
8. Learning the online trading system takes time.
Depending on how easy or sophisticated your trading needs are, you may need to invest some time into getting the facts on how to use online tools or software for trading. Not knowing how to operate the online tools can result in errors and costly mistakes.
Depending on how easy or sophisticated your trading needs are, you may need to invest some time into getting the facts on how to use online tools or software for trading. Not knowing how to operate the online tools can result in errors and costly mistakes.
9. Trading accounts may be open to online fraud.
Identity thieves may be on the prowl for those trading online. Investors need to be sure to secure their online connections before the first trade takes place.
Identity thieves may be on the prowl for those trading online. Investors need to be sure to secure their online connections before the first trade takes place.
10. The system could go down.
Although rare, a system malfunction can happen and you need to have a backup plan in place it does. Before opening up an account, you may want to find out what contingency action plans are in place.
Although rare, a system malfunction can happen and you need to have a backup plan in place it does. Before opening up an account, you may want to find out what contingency action plans are in place.
Online trading takes research, patience and having the proper measures in place for any unforeseen events. By taking the time to research the facts and having the intention to use online stock trading as a tool for the long haul, you may have the potential to profit.
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