• Online Stock Trading

    It doesn’t matter if you are a complete novice, a seasoned investor, or someone who has just been hanging around the sidelines trying to figure it out, you can make some serious money with online stock trading.

    Of course, you can also lose more than you profited, but I’m going to share with you what I wish someone had told me at the beginning. I was perhaps in the worst situation, I had far less knowledge than I thought I had and it worked against me, so I don’t want that to happen to you.

    • Basics

    We’re going to get elementary here because starting at the beginning and working towards proficiency is the best way (once again, I’m speaking from experience) to learn online stock trading.

    • Brokers

    Like any other mode of investing, you need a good online stock trading broker. I’ve listed some for you that I have found to be quite good. I’ve even provided links to their websites. See, I told you, I’m here to help!

    List of Preferred Online Stock Trading Brokers

    Scottrade
    Fidelity
    Think or Swim
    TradeKing
    ETrade
    TradeStation
    Charles Schwab
    Firstrade

    I especially like Scottrade, Think or Swim, and TradeStation. Scottrade’s fees are remarkably low in light of all you get from their website and their powerful trading software; Think or Swim has higher fees, but the capabilities of the trading software is more powerful; and TradeStation, well, what can I say, it’s the mac daddy of them all in my opinion, but you do have to pay for it. I spend about $150 per month for my TradeStation platform and all the bells and whistles, but you can get what you need to start without spending that much, or even spend nothing.

    Please remember, if you are going to trade stocks, options, futures, commodities, mutual funds, Forex, bonds, CD’s — whatever, you need an online trading platform that allows you to practice with paper trading in simulation. That means you are working with play money but in real time, and please believe me, that’s the best way to learn. Think or Swim offers a great simulator.

    While you probably already know you can trade most anything online, we’re going to concentrate on stocks right now.

    • Education

    Homework is important to successfully trade stocks whether it’s online stock trading or by rotary dial (is there still such a thing?). You now have all the information and tools that were previously only available to professionals. All the news releases, reports and reviews of strategies, charts, calculators—virtually everything is now at your fingertips. You can even trade online with your cell phone

    Your broker’s software allows you to work with your account profile to develop investment and retirement plans. Your history is there and tax information. You can even join other investors in a chat forum to hear their ideas and experiences. Continued education is non-stop with webinars and newsletters.

    Here we go with the fundamentals that you MUST understand:

    • Common Stock

    When you own a share of stock, you own a part (albeit small) of the company who sold you that stock. There are preferred stocks (meaning you get paid dividends first) and common stocks, which is what we are talking about with online trading.

    • Orders

    There are different types of online stock trading orders you will place that give your broker instructions of what you want to do when you buy or sell stocks, and any other type of investing vehicle, especially stock options or commodity or index futures.

    • Market Order

    The most straight-forward online stock trading order and easiest to fill (meaning you found your buyer or seller) is the market order. You are buying or selling a specified number of stocks at whatever price the market has set at the time you execute (push the button) you order. While this is a way to handle your trade quickly and easily, you will not be able to guarantee receiving or paying the price that you would like. You’ll receive or pay whatever the moment’s closing price turns out to be.

    • Limit Order

    You will be buying or selling the stock at the price you want when you place an online stock trading limit order. The fee will be a little more, but at least you won’t be surprised when the market takes a sudden turn and you get caught with a market order that leaves you scratching your head. Your limit order sets a specific price you want to buy or sell at and the trade won’t happen until that set price is met.

    • Stop Loss Order

    A little trickier (but still simple) are online stock trading stop loss orders. These type orders will protect your position, sort of like an insurance plan. Example: if you just bought 100 shares of Noodleoodles (NOOOO) at $50/share. You just made $200 when the price per share advanced $2 and you want to protect that profit by minimizing any loss that might come if prices change. So, you would place a stop loss order at the price you originally paid or at a price that you feel is the maximum you are willing to risk on any loss. Let’s say you are very conservative and don’t want to lose anything, you would place a stop loss order via your trading software to sell NOOOO when the price falls to $50. While you still have to pay a commission on both trades, you have reduced your risk. So, now you have to leave to go to a business lunch, but you can relax, because you know that if the stock price suddenly drops to $50, your online stock trading stop loss order will kick in. In the same order you know that if the price remains the same or increases, you are still in profit mode, and still smiling. The stop loss order never triggers and you have a nice lunch.

    • Trailing Stop Order

    Now, there is always the other side of the coin, an online stock trading trailing stop order will protect your profits instead of limiting your loss. Let’s say you bought 100 shares of that noodle company for $50/share: NOOOO @ $50, and now shares have gone up $5 to $55. You are sitting on $500 in profits and want to protect those profits. A trailing stop order will do that for you, but in the reverse way the online stock trading stop loss order did. You want to protect that $5 gain, so you place a trailing stop order with your online stock trading software. This trailing stop order will move, or trail along, as the price of your stock rises. Your profits will continue to increase and if there is a reversal, you have an online stock trading order ready to kick in that will protect your previously earned profits. You can still go to that luncheon and have a good time.

    • Day Order

    A day order is only good until the close of that day’s business. If your online stock trading order does not get filled, it is cancelled. If you want to continue the next day with the same order, you will have to place another one.

    • Good Till Canceled Order

    No matter what kind of online stock trading order you set up with your online stock trading software, a good till cancelled order will remain in effect until you cancel it or change it.

    Online Stock Trading is Fast & Efficient

    Online stock trading is so convenient. You don’t even have to be in front of your computer to make and manage your trades. By understanding the different types of orders and having your predetermined strategy firmly in place, you will maximize your gains and limit your risk. Now, isn’t that nice?

    A stock is the easiest investment vehicle to learn to trade, and online stock trading makes it even more simple. You can start as a greenhorn and become comfortably proficient in a relatively short period of time. Whether you are an experienced investor, or still wet behind the ears, whether you day trade or if you’re a swing trader, there are literally billions of dollars out there to be made. Give it a shot – remember, if you continue to educate yourself and make smart choices, you can make a very nice living at online stock trading.

    © 2011, www.daytraderoptions.com. All rights reserved.

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