Online Stock Trading – Stock Trading Strategies

The ease of online stock trading draws the attention of new investors and investors looking for an alternative to the old methods of trading. With little more than an account and a mouse fortunes can be made or lost from the privacy of one’s own home. However, before getting carried away, investors should look into the basics of stock trading strategies to help protect themselves from what can be a very tempting albeit confusing world of internet stocks.

The only consistent notion about stocks is that they are inconsistent. Investors that make decisions based entirely on emotional “gut feelings” or make decisions based on desperation will only do about as well as they will at the casino. Planned, precise, and well thought out decisions make for strong trades. Online stock trading need not be a random roll of the dice.

Regardless of any pre-planned strategy that an online investor approaches the online trading world with, there are two basic entities that need to built into any strategy. All trading is based on maximizing the profits while minimizing the risks. These two factors also tend to cancel each other out. The greatest risks usually turn the greatest profits while the smallest risks typically turn tiny but long term profits. This means that an individual investor needs to find their individual risk tolerance while building their strategy.

There will be losses. There’s no strategy in the world that can guarantee online stock trading without loss. Loss is part of the game no matter how serious the player. The most successful online stock traders in the world have one basic rule implemented into their trading strategy. They all have their stock portfolio divided into percentages. They have a predetermined percentage seeking high risk, high return stocks, a predetermined percentage seeking medium risk, medium return stocks, and a predetermined percentage seeking low risk, low return stocks. The predetermined percentages vary from investor to investor and some have the bulk of their percentages in low risk while others have the bulk in medium risk. Placing the bulk of the available funds in high risk stocks is a sign of either gambling or desperation, neither one is considered a very sound strategy.

The reason that these percentages are predetermined for the vast majority of successful online investors is to help maintain unemotional investing. If there is a set amount of the available funds doing predetermined job, then the emotional windfalls and shortcomings are incapable of moving the percentages around. Online stock trading can become emotional, and when it does online traders start making bad decisions based on their emotions. Keeping the emotional trading to a nonexistent minimum is very difficult for many online traders, but it is also on of the best laid online stock trading strategies there is.

Every individual investor’s strategy will vary to suit their needs, their risk tolerance, and their individual style. However, having a basic strategy before the account is even opened is a vital key to online stock trading. Investors without a strategy tend to lose more often than they succeed. Every individual investor’s emotional strings are different, and some will need firmer, more complicated rules before setting off into the online investment world. Others will do fine with a basic outline. While learning the ropes, it is best to dabble with small sums of money rather than place large chunks of money into any stock, no matter how good it seems. One of the most significant pros to online stock trading is the investor’s ability to go through the motions on paper without ever spending a dime while they keep an eye on the stocks they believe they are interested in. Over time, online stock trading can become a very healthy form of secondary or even primary income, but the investor has to start with a plan.

Basic Stock Trading

Many investors have a rudimentary understanding of how stocks are traded, but they do not fully understand how things trade. There are many horror stories. An investor sees their stock slipping, knows it will slip further, so puts in an overnight trade only to learn later that stocks continue to fall after the local market closes. Or, an investor believes they are fixed at a certain number at the moment they call their broker and learn later that they bought stocks at a much higher cost than expected.

How a system that manages billions of shares trading in a single day, that never ends as the sun skims through the time zones, is a mystery to most.

Trade Equals Buy or Sell

In the jargon of the financial markets, a trade happens when an investor buys or sells. The request to buy goes to the ‘floor’ where the stocks are purchased. The purchaser owns nothing more than pieces of paper. They do not own a part of the company. They cannot put an ad in the paper to sell their stocks. In most cases, their stocks cannot be used as collateral against a loan, or mortgage. But, somehow, these pieces of paper represent an intangible asset that can increase in money – even if the company is not doing well.

Yes, a stock’s value is dependent on a company’s financial health, but the stock itself can be sold independently of the company’s balance sheet. For example, technically, you can walk out and pay 10x the value of a stock for it, without ever reading the company’s balance sheets.

Exchange Floor Trades

Trading on the ‘floors’ is done at the markets. The futures markets trade ‘in person’ and the trades take place on the floor of the exchanges like the New York Stock Exchange. This is the image most people have in their minds, and the one portrayed in movies and on television. The floors are basically overcrowded with hundreds of people shouting and gesturing to each other, talking on phones, watching monitors, and working at terminals.

Here is a simple scenario of an exchange floor trade:

The investor tells the broker to purchase 100 shares of AJAX. The order is sent to the floor clerk at the exchange. The floor clerk sends the order to a floor trader who goes looking for another floor trader who has 100 shares of AJAX to sell. The two agree on a price. The deal is completed. The entire process can take a few minutes. Several days later the investor receives a piece of paper in the mail confirming the trade.

Electronic Trade

NASDAQ, unlike the New York floor, is 100% electronic. The computer networks match buyers and sellers, without bothering with brokers. Both small and large investors, including those who handle pension funds and mutual funds, prefer this type of trading.

There is instant confirmation of the trades, and the trades take place in real-time – which is vital if a stock is spiraling up, or down.

Unlike what most people think, they cannot access the trading floor. Even if they work through their home PC, they are still working through a broker, or at least, a broker’s computer network.

Why Understand Trades

One of the most important aspects of understanding trade is to manage your risk. The idea that you can wait until the stock reaches a certain point and then sell is unrealistic. Even if a buyer does have a broker, there may be 32 different clients wanting to buy or sell a certain stock. This means that an individual’s order can happen several minutes, to an hour or more after the sale is placed. This can have a direct effect on the profit or losses endured by an individual investor.

Is Online Stock Trading Right For You?

The internet has opened up a world of possibilities from shopping to education to financial success delivered through a wire straight to our desktops and laptops. The internet revolution has empowered small investors to educate themselves and to make financial gains in the arena of day trading and the internet stock exchange.

The traditional hassle of finding a broker and reaching them directly via phone or even e-mail is rapidly becoming obsolete. Online trading has advanced the average stockbroker into a whole new realm. For some, it’s a marvelous pandemonium that has freed them from obsolete tradition. For others, online stock trading is a scary sea of the unknown and an abyss of pitfalls.

Fortunately, with a little education and a little research, the average stock trader can decide whether online stocks are the right tools for success or if they are more comfortable sticking with traditional venues. Exploring that education is vital even if you are already involved in online stock trading. There is always room for improvement and always more profitable ventures.

THE BENEFITS OF INTERNET STOCK TRADING

We already know that the stock market is a volatile and unforgiving arena. Some people do very well in the stock market while others lose every penny they invest. What is the difference between these two types of investors? Some would say luck, and while luck does factor into the picture in its entirety, it is a very low percentage factor in stock investments.

Online internet trading still allows an individual investor the ability to obtain a broker and receive a consultation, although most report that the brokers who rely on internet clientele are not as customer service oriented as the traditional broker whose brick and mortar office is just a few miles away. Online brokers tend to give most of their time and attention to the large accounts while the smaller accounts often fall to the wayside. That does not mean they do not provide a valuable service. It simply means that the service provided is about what you can expect of most online-only services. Successful online companies have a very large clientele and can afford to lose a few who they consider being a little too needy.

However, the online stock broker tends to have lower fees and commissions in return for their lack of availability. Traditional stockbrokers have the ability to receive orders online but their commissions remain about the same as calling them on the phone and traditionally dealing with them.

Internet stock trades tend to be faster and more reliable, but beware, not all of them are instant. There are some basic options when it comes to buying or selling stocks online. Your request can either be set to a price or set to shares. Depending on the firm you are utilizing, you may not receive the same price that you noticed on the stock ticker of too much time has gone by or the stock made a sudden increase or decrease.

This not all that different from traditional stockbrokers, however, there is the notion that anything online is instantaneous. Most firms, whether online or traditional will explain these details when opening an account. There are a few however, that expect you to do your own research and offer very little in customer support. The simple adage to this basic issue is to look before you leap.

THE EDUCATED STOCK INVESTOR

It does not matter how good the firm is, or how good you believe the online stock program you have discovered is believed to be, nothing substitutes a solid education in managing your stock investments. The educated stock investor always has the advantage over those who place their financial future into the hands of a broker. Some believe it is too complicated to educate themselves, that the facts, figures, trends, and charts are beyond the average person’s ability to understand. This is not true. Investing is something that few people have explained to them in a way that is simple, basic, and easily understandable.

Math, Science, and English are the basics of our education as children. Stock market investing is left as this looming adult topic that exceeds our knowledge base. The truth is that the basic key elements of stock trading are really quite simple and there are resources out there to help us understand the wealth of information we tend to find intimidating.

One of the best resources out there on the internet today for the investor looking to educate him or herself about online stock trading is online trading ideas. The beauty of this website is the simple breakdown of information so that the new investor doesn’t have to go into information overload and become overwhelmed with all there is to learn. The articles are informative and cover key points of day trading with concise information in readable styles.

The stock market is a fluid entity. It is filled with changes and differing strategies depending on the current trends. For awhile the stock market seemed like an infinite gold mine. The trading days of the late nineties and the early twenty-first century were littered with booming stocks that seemed to consistently skyrocket off the charts. Those days are gone for now but may return. The same strategy one may have used then is not going to work in today’s stock market.

Making sense of the stock market news briefs, media tickers, and hot tips take more than just the basic eye for low figures and basic gains. Again, that is where the educated investor can develop a strong plan and a concrete investing strategy that can help him surf through the more volatile days of the stock market.

Even the best of internet stock traders can lose money in the online stock market. It is always best to exercise caution when beginning your trading career. Whether you are just looking to make a little extra money for retirement, college tuition, or are looking to earn a living from internet stock trades, there is an element of risk involved. Stock trading is the equivalent of highly educated gambling. Anything can happen and there are simply no guarantees.

SUCCESSFUL INTERNET STOCK TRADING

Even with the volatile markets and the risks involved, success is still possible. The best way to approach the online stock trading arena is to develop a strategic plan based on realistic expectations and grounded in the basics. Be selective, especially in the beginning. Just because a stock looks good at the onset doesn’t mean you need to go throwing all of your assets into it. Many stocks look good at first glance. Being selective means approaching your investments with a bit of skepticism and realism.

One of the best ways to be successful is to listen to those who are already successful. Again, one of the best resources for all in one place information is a remarkably informative website for online trading ideas. With quick tips and in-depth advice and intelligent commentary, this website has something for everyone and every investor’s comfort level.

It’s a great place to go if you’re considering using an online discount broker or figuring out if one of the top sites is better for you. Online brokers vary, and some who claim themselves discount also claim to service the small investor better. But beware, a simple course in one of the many online trading academies does not make anyone a professional. Of course, it’s good to be educated but there is still a difference between the professional broker and the good enough amateur.

Online investing, or any investing for that matter, is difficult enough. It’s truly not worth the few bucks saved in measly commissions to deal with anyone less than a professional. Anyone promising ridiculously high returns in short periods of time is not a professional, at least not a professional online stockbroker. Be sure you know the sea you’re swimming in.

UNDERSTAND THE STOCK OPTIONS

It’s an exciting venture, to be able to log on to any computer anywhere in the world and follow your money twenty-four hours per day, seven days per week. Before you set your sights on the stars, however, make sure you really understand your options. Take the time to really look into what professional experts and successful investors are talking about to give yourself a fair chance.

Online investing is difficult enough without having to deal with a sea of sharks out there, and they are out there. Carefully read through the articles and information posted on the websites for online trading ideas and evaluate the options available to you, your risk tolerance, and even whether online trading is right for you. Most people are truly finding benefits in the online trading revolution, but of course, there will always be the few who insist on a broker that can return a voice mail and deal with them directly when the need arises.

Don’t forget to have fun. This amazing technology wasn’t even available to most of our parents, and of course, their parents wouldn’t have imagined it in their wildest dreams. The future is there for those who want to make the most of it. Take your time, get informed, and when you’re ready you will swim.

Who Is Involved In Online Stock Trading?

Online stock trading is a fairly new trend sweeping the investing world. It might seem a bit new age to some, but the reality is this sensation has opened the doors for sound investing for a lot of people from all walks of life. So who is exactly taking advantage of online stock trading?

The answer to that question is a whole lot of people!

Since online stock trading makes it very easy for anyone to get involved in market investments, cutting costs and red tape, the trend is being used to its advantage by all sorts of people.

From big-time investors who want a little more control over their money in the markets to school-age children that want to learn about the market while investing their allowances, the online market has made it possible for virtually anyone with Internet access to get involved in buying and selling.

Typical investors in days gone by were typically businessmen and women or those with means by birth who could afford to buy in blocks and employ brokers to do the trading for them. Now, the online market has made it available to bypass big brokerage fees. This means that even the smallest of investors can get in early and earn big. With this in mind, some investors today include:

Retirees: Online investing is a great way for retirees to get into the market without having to pay extra fees. Those with Internet access at home can check their investments daily and make adjustments necessary.

Stay-at-home moms: Many women are taking advantage of the benefits of online stock trading to invest their family’s spare money in stocks that could offer good returns. This is a great way for moms to get a bit of adult time while they research stocks and make determinations on when to buy and sell.

Couples: Many couples that couldn’t afford to invest in the past are now working as teams to look at the different buys and make decisions together on how to invest their money.

Classes: The online stock trading revolution has made it possible for economics classes to literally show students hands on what happens in the market. What better way to learn the ups and downs of the market than hands on through a lesson that doesn’t cost students or schools a ton of money in the process?

School children: Many youngsters are enlisting their parents help to invest allowances, yard mowing money and more. These Internet and stock market savvy kids have made headlines when their stocks have paid off.

Big-time investors: While many that take advantage of online stock trading don’t have a lot to invest, some larger investors prefer this route, too. Since it offers a lot of hands-on control, it can be a great way for anyone from the pocket change investor to the billionaire to get into the market.

As online stock trading becomes more popular and more and more big firms get into the act the reality is those who get into online stock trading span every imaginable race, class and socioeconomic group. The online stock investor of today looks just like you! While this method doesn’t take away the risks, it does open the doors for more people to get involved.