I remember the first time I started to trade online. It was just before the tech bubble of the late 1990's and the internet was still something new for most people. Purchasing the now forgotten company was easy, and I made a few dollars on that trade. It was so excitingly simple.
Flash forward a couple of years and I have made and lost my share of money. While still ahead of the game, I learned a few things about online stock trading. Freedom is great, but it comes at a cost. Lets have a look at the benefits and the trade offs of online stock trading:
The Benefits of Online Stock Trading
Low commissions ? for most people, this is the number 1 benefit of investing online. For $9.99 or less, you can buy and sell your favorite stock. Full service brokerage fees are usually over $100. If you are an active trader, that can start to eat up your profits very quickly. For every $10 000 you invest, you have to make 2% ($200 - $100 to buy and $100 to sell) just to break even.
Quickly act on price moves ? another great benefit of online stock trading is being able to quickly act on price moves. With the click of a couple of buttons, you are able to take advantage. With a full service brokerage, you'll have to call first, explain what and why you want to trade that stock and then wait to see what price you were filled it. Odds are, you may have missed the best entry point, and paid 10x the commission for that privilege.
No middle men ? No justifying why you want to trade, no having to have someone suggest that a stock might be too risky. You call the shots.
Information ? at your fingertips online stock trading can bring much needed and real time info that can help you when to buy and when to sell. Technical charts, real time prices and information sharing can be easily accessed online.
The Drawbacks of Online Stock Trading
No middle men ? while I just listed this as a benefit, its also a drawback. The majority of my losses were from stocks that did not meet my investment plan but were simple stocks that were being pumped and hyped up. Often, you end up buying a stock that is moving higher, and end up having to sell at a loss. When you trade at a discount broker, there is no stopping you from making a mistake. With a full service brokerage, your financial planner can help filter out the bad plays from the smart ones. This advice alone can more than make up for commission fees.
Investment Plans ? online stock trading doesn't automatically come with an Investment Plan. Why are you buying a stock? What is your exit plan if things don't go right? Will you use margin? Will you buy penny stocks (and if so, what percentage of your portfolio will be at risk)? A full service broker can help create an investment plan. Trading outside of your risk tolerance is one of the biggest risks your portfolio will face.
The best suggestion I can make for you is to look at a combination of both. Trade stocks online, but talk to an investment planner, develop an investment and trading plan first. While you may have to pay for his time, your trading plan will help you to avoid unnecessary risk when you on online stock trading.
investment strategies for trading penny stocks.
1source4stocks.com provides traders with online trading and investment startegies and tips. Free stock picks for subscribers to the Leading Source - http://www.1source4stocks.com
I remember the first time I started to trade online.... Read More
All professional traders have a trading plan. Trading futures is... Read More
You may be asking yourself "how does one begin to... Read More
There are many advantages to Trading FOREX as your main... Read More
The European Union (EU) constitution was dealt a double blow,... Read More
Below I will describe three basic principles that may come... Read More
Foreign exchange trading is the trading of currencies. Most currencies... Read More
One way to acquire discipline in trading..."Hey Joe! When you... Read More
Many Americans are interested in getting involved in forex trading.... Read More
Foreign exchange market is also known as Forex or FX... Read More
The business world is a complex web of supply and... Read More
What is Stocks Trading?Companies throughout the world issue new stock... Read More
One of the best kept secrets in trading is that... Read More
What is arbitrage? Arbitrage is the simultaneous buying and selling... Read More
If you are reading this article you are probably one... Read More
ISO 4217 is an international standard describing three letter codes... Read More
Forex option brokers can generally be divided into two separate... Read More
Have you heard the wise saying that a trader who... Read More
My father, who owns a small parts store and garage... Read More
Foreign exchange market, or better known as FOREX, is the... Read More
The first and perhaps most important "secret" is to realize... Read More
Most new traders tend to focus just about all their... Read More
It is possible to buy and sell money from different... Read More
The following are some of the most common types of... Read More
Which way will the forex market move? Do you just... Read More
Over the past several years, the popularity of online currency... Read More
Forex trading, or foreign currency trading, has become a bit... Read More
Profitable day traders recognize that momentum trading is among the... Read More
When day trading the SP and Nasdaq futures, do you... Read More
Q1: When you consider that the foreign exchange market has... Read More
Forex made easy is as simple as you would want... Read More
There are lot's of Forex signals providers out there. New... Read More
Forex signals are sent by a forex firm to their... Read More
You may be asking yourself "how does one begin to... Read More
A Forex broker is a broker dealing in foreign exchange,... Read More
For those unfamiliar with the term, FOREX (FOReign EXchange market),... Read More
Day trading is all about making buy and sell decisions.... Read More
Foreign exchange market is also known as Forex or FX... Read More
Most traders tend to concentrate on pinpointing the perfect entry... Read More
What are Forex signals? Forex signals are paid services offered... Read More
Forex, or Foreign Exchange, is the simultaneous exchange of one... Read More
International commerce has rapidly increased as the internet has provided... Read More
Below I will describe three basic principles that may come... Read More
There is an old saying that the market is driven... Read More
Forex option brokers can generally be divided into two separate... Read More
I am reading a fantastic book on trading, first published... Read More
What is Options Trading?An option is simply granting someone the... Read More
Are you thinking of entering the fast-paced world of day... Read More
Forex trading online is a fast way to use your... Read More
Foreign exchange currency trading is also known as Forex trading,... Read More
It is possible to buy and sell money from different... Read More
What Is Online Futures Trading?A futures contract is an agreement... Read More
Have you noticed that when someone's trying to sell you... Read More
Momentum day trading can be extremely profitable when done correctly...Day... Read More
Long TermLong term traders will work from end of day... Read More
There are lot's of Forex signals providers out there. New... Read More
My father, who owns a small parts store and garage... Read More
An online forex broker is a firm that facilitates retail... Read More
Many Americans are interested in getting involved in forex trading.... Read More
There are many types of investment methodology out there. All... Read More
For the first time in several years the U.S. dollar... Read More
I remember the first time I started to trade online.... Read More
You know the old joke:"How do you make a million... Read More
The following situation happens quite often to many traders. Look... Read More
Countries devalue their currencies only when they have no other... Read More
Consider the following: As a trader you are in a... Read More
Currency Trading |