AUG 28: Online Stock Trading: How does it Work?

by David Jenyns on August 28, 2006

If youíve never traded stocks online, youíll be surprised how easy it is. Online stock trading can be a fun hobby or even a serious business. Before you let go of any money, though, do your homework and do plenty of research.

Day trading is the riskiest kind of online stock trading. More people have lost money and a lot of it, on day trading than on any other kind of online stock trading. It depends what your motivations are whether you want to be a day trader or just have the convenience of the internet for investment purposes.

You still have to pay a broker and fees online have a wide range. Definitely shop around for rates before you settle on a broker. It works basically the way it does in the real world except you can participate in online stock trading in your pajamas.

Research the stocks you want to buy and research the online stock trading companies. Donít just rely on the information you find on the company website either. Do a thorough internet search of each company and make your choice on objective information. Any company is going to tell you how great they are on their website and how much better they are than all the others. Some online stock trading companies will offer a bonus depending on the amount you put in your account. Donít make your decision based on this.

Thatís not to say that you shouldnít trade with one of these companies. But more often than not, it is the one that offers the bonuses that doesnít have much business. Now this might just be because they are new so donít discount their services because they offer a bonus. Just donít let that bonus be the deciding factor.

What are the funding options for your online stock trading account? This is important. You should be able to use a credit or debit card. Some will even let you use Paypal. Beware of any online stock trading companies that only accept wire transfers to fund your account. Keep clicking if you see this. Another important factor to consider: Make sure the website lists a physical address and full contact information. Any reputable business will do this.

Sadly, for any business opportunity that exists whether it be in cyberspace or not, there will always be scam artists. Donít let them take your money by not checking them out thoroughly before you invest any money in online stock trading.

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