There are few things more fun than making money in your pajamas. Thanks to today's technology, it’s possible to purchase shares online at breakfast without talking to a stock broker or adviser. Trading shares online is fairly easy after you’ve set up an account and made your first few trades. The difficulty is in setting up your account so that you’re easily able to make trades without leaving the comfort of your home.
Review a few different online brokerage firms to decide which is best for you. Compare trading costs and account fees. Watch out for inactivity fees, which charge your account when you don’t trade. Find out if accounts have locations near you in case you need to use the brokerage office. Compare research tools, such as charting ability and stock comparison screens. Finally, see which firms offer check writing on an account if you plan on accessing your funds from time to time.
Open and fund your new account. Complete the online application and either send a check, wire funds or bring cash in person to a local branch. Be sure to keep copies of your application and checks sent in case something goes wrong during the process of opening your account. Ask about establishing a transfer on death beneficiary designation on your account. This will ensure that your funds automatically transfer to designated individuals if you pass away.
Write out your stock trading goals. The Financial Industry Regulatory Authority recommends beginning any investment plan by writing out your goals in concrete, realistic terms. This will help you choose stocks that meet your objectives, and can also help later as you monitor your portfolio to ensure your stock purchases are meeting your investment objectives.
Find stocks that match your goals to purchase online. Use online stock screening tools at your brokerage website and popular online financial sites such as Yahoo! Finance and The Wall Street Journal Online. Screen for company sizes that match your goals. Also practice screening for growth, revenues and management insider trading activity.
Purchase your first shares. Use limit orders if you’re worried about volatility in the financial markets. Limit orders allow you to predetermine a price target below the current trading level. If the stock price plummets to your target, an order to purchase shares will immediately execute. If the price never drops, you won’t buy shares. As a result, some investors prefer market orders, which purchase shares immediately at the best price available.
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.