Considering what’s been happening with the stock market lately, it’s anybody’s guess as to where you should invest your money.
Before you jump on the Internet, register with a brokerage and start your online trading, it’s a good idea to visit the U.S. Securities and Exchange Commission web site for a wide range of information about when and how.
To research specific stocks, bonds, mutual funds and securities with which to start your online trading, go to bankrate.com for a history of past performance and current values.
Before you hand over your money, however, you need to ask yourself whether you are investing or gambling with your online trading venture. A true investment is not a get-rich-quick scheme.
Next, ask yourself whether you need a financial advisor to help in making this decision. Do your homework to decide if you feel comfortable navigating the treacherous oceans of virtual online brokers and pitfalls that come with online trading. If you decide you’d rather leave it to a so-called expert, hook up with a brokerage house that can handle your investments for you. If you decide to follow through with online trading yourself, here are some tips.
Five Do-it-Yourself Tips To Online Trading:
1. Limit your losses. You can do this by researching the risks of your investments and by boning up on how online trading changes during fast markets.
2. Limit your transaction costs. There are hundreds of online brokerages through which you can buy stocks for as little as $5 per transaction. Some of the “Big Boys” charge $30 or more for a transaction, so be careful.
3. Place a limit order rather than a market order. This means you control the top price at which you will buy. Stock prices change continuously throughout each trading day. A stock that opens at $8 might end up at $23 by day’s end, or might dive to $1.50 before the market closes. You never know which way a stock is going to move. A buy limit order can be executed only at the limit price or lower, and a sell limit order can be executed only at the limit price or higher. When you place a market order, you can’t control the price at which your order will be filled.
4. Verify your order went through. Online trading is mostly instantaneous. However, at times there are delays that can jam up the works. Sometimes an order is delayed past the point where it can be executed because the stock price has moved beyond your stated limit. If you’re placing a cancellation order, that, too, must be verified afterward. You may receive an electronic receipt that the cancellation went through, but that doesn’t mean the trade was actually cancelled. The SEC has no regulations governing the length of time between placement and execution of an order made through online trading.
5. Complain immediately. The law provides only a limited time to take legal action regarding a stock transaction through online trading. If you are unsure about the complaint process, check it out at sec.gov.
Need more computer proficiency to begin online trading? Look for computer training schools in your community or online. There are many computer training courses offered over the Internet.
