Once the sole domain of Wall Street, stock trading has become easily available to all people in the last 2 decades, thanks to the internet. Before online trading came into the scene, people relied on the services of stock brokers, who would make buy-and-sell orders on their behalf. Today, we are able to execute these orders ourselves quickly using online trading solutions.
But for a starter, buying and selling stocks through the web can still be quite challenging. To help you jump-start and eventually become familiar with the online tools of trading, here are the steps you should take when trading stocks online:
Determine and build your capital.
Before you start investing in stocks, you should have a clear idea of how much money you are willing to spend on your initial investment. Make sure you place your investment in a single, accessible place, which means you should open a money market account or other similar options. Your bank should be able to assist you in starting up a savings account where you can park your money in.
Find an online broker.
When doing this, find a one that suits your basic needs in trading stocks and your investment strategy. You can start by choosing a company with an attractive beginner’s package or those that allow customers to trade stocks online for free for a certain period of time to get a feel for what is involved. Either way, make sure you will be saving some money with the packages that they offer.
Review and be familiar with trading rules.
Take note that there are specific rules you should adhere to about what to do with your gains from trading stocks online. One of the most common and important of these rules is that you cannot withdraw stock gains and just hide them, as you need to report them to tax authorities. So, do you research and educate yourself about the critical points in stock trading. Remember the old adage, “Ignorance will not save you from the law.”
Look for the right stocks.
Put in mind that there are thousands of stocks being traded on the US exchanges and other markets in the world. To make your search easier, hear the talks about stock plays and build your own opinion through research on what stocks make the most sense to you. You can also check out other investment advice and news sources. And of course, you should utilize the financial data your broker organized for you.
Learn how to use your broker account software.
When getting an online stock-trading service, you will be provided with access to an account that has electronic features to help you with buying, selling and tracking your trades. Make sure you learn how to get around these things so you will not miss opportunities to grow your investment.
Place initial transactions.
For a great start into online stock trading, try to make small test bids to watch what happens. By doing so, you will soon see the correlation between what you buy and sell, as well as the core values in your account. Through time, you will get savvy in trading stocks online.
While you are at it, remember to keep good records. And again, take note of the many rules around this trade, which can involve tax burdens on your investments.