How do I Begin Internet Stock Trading?

Trading stocks over the Internet gives you the thrills of buying and selling without having to visit or call your broker for trading advice. Research tools and trading advice are available online at broker sites and popular Internet destinations. No longer do you have to find a broker who suits your needs and hold meetings to bring him up to speed on your goals. With Internet trading, you’ll only need to follow some basics to set up your account and begin making money to meet your financial goals.

Lay out your goals. If your goal is to purchase and hold a few stocks, focus on maintaining long-term goals. If your goal is to trade frequently to create an income stream, you’ll want to establish daily or weekly income goals as well. Whether you’re a buy-and-hold, long-term purchaser or daily trader, your goals will fuel your investment choices and expectations for results.

Learn some key fundamental data points. Fundamental analysis focuses on the health of the company. To find healthy companies for your Internet trades, focus on revenue and earnings growth. Revenues are new sales coming into the company, while earnings are the amount that the company keeps as profits after paying out expenses. Both are important factors to review when looking for healthy companies that deserve your investment dollar.

Learn to read stock charts at popular financial websites. Not only will you see recent trading trends, but stock charts can also warn you about news that you should explore. If the stock jumps or plummets quickly, or the volume of trades suddenly spikes, this is an indicator that there is news that affects the investment. Stock charts can help investors seeking value, look for stocks that seem to have low prices; they can help growth investors look for stocks with prices rapidly rising.

Open a brokerage account online. Internet stock trading companies aren’t all created equal. Although most have very low trading costs, you’ll want to also examine other aspects of the firm’s services such as research tools, the availability of local branches, and check writing accounts if you plan to remove funds from time-to-time. Review several different online firms before settling on a brokerage house, filling out the forms and funding your account to begin trading.

Review different types of orders to protect your investments. Stock traders use many different types of trades when placing online trades. Novice traders focus on the market order, which purchases a stock at the prevailing price when you decide to buy. Although experts use market orders also, in some volatile markets, a limit order may be a better choice. Limit orders allow you do pick a price below the current trading range, and if the stock plummets to your target a market order triggers and you purchase the stock for a lower price.

About the Author

As a former financial advisor to companies and individuals for 16 years, Joe Andrews knows financial planning and marketing from start-ups to personal budgets. He also writes on motor racing, board games and travel. Andrews received his B.A. from Michigan State University in English. He is currently working on a young adult novel.