For years stock trading has been portrayed as an activity that only the elite take part in. Others will tell you that stock trading is a “mugs game” and to stay clear of it completely. The truth is that stock trading is something that almost anyone can take part in provided you have enough time to study the basics and develop the right mindset to make sensible decisions when it comes the time to invest your money. Here I am gong to show you how easy it has become for anyone from anywhere in the world can begin to make considerable amounts of money trading stock, not in the traditional way but by using the wonderful advancements in technology, namely, Online Stock Trading.
Advancement in Stock trading
When you think of stock trading and the stock market you will probably have the image of hundreds of traders shouting prices and tearing their hair out, as television depicts. It may surprise you to hear that stock trading on the internet has become the popular method of trading stocks from home and without the need for a conventional broker.
The modern practice of trading goes like this; sign up for an online trading account with one of the many online stock brokers, fund your account, study what stock you would like to buy and place the market order with your broker. They will buy the stock for you and most brokers offer investment advice if required, but for an additional fee. If you feel confident that you can manage your portfolio without professional advice, which can prove expensive I might add, most online brokers offer free tools to assist you with market research such as historical charts, real time stock quotes and educational videos.
Tracking a company’s performance is essential if you are trading short term by checking charts and graphs. If, however, you intend to keep the stock for a longer period of time such as 5 years or more, you will need to check the performance of the stock monthly to ensure that the company hasn’t sustained considerable losses that could affect the value of your investment.
Taking the Guesswork out of Trading
Online stock brokers may have many valuable tools and services available to their customers, but remember that they are really only out to make money from your account with them. How do they make money from you? From monthly/quarterly account maintenance fees, commissions on each trade you make ($9.99 in most cases), account inactivity fees and other hidden charges. I am not going to go much deeper into the broker side f trading, what I am talking about is Stock Trading Software. Stock trading software has been around for years, usually used by banks and other financial institutions to predict market fluctuations and future stock prices; it has been available to the general public in recent years. There are many companies offering this software for sale online for reasonably low prices.
The software is downloaded to your computer and allowed to run for a period of time everyday with access to the internet. It will process stock prices, charts and market changes and eventually produce a stock pick for you to invest in. You then place a market order with your online broker for the desired number of shares you want to purchase. The stock trading software will then continue to process information and monitor the stock pick it gave you until it’s sure that you can sell the stock for a profit.
So what the stock trading software is actually doing is taking the guesswork out of stock trading. All you need to do is leave the software to run for an hour a day, wait for a stock pick and then buy that stock using your online stock broker account, then selling the stock for a profit when the software tells you to.
It is as simple as that. But there is always that small chance that share prices will suddenly drop before you get a chance to sell them; this is where your stop loss order saves the day. It is essential to set your stop loss with your broker before making a stock purchase. This will ensure that your stock will be automatically sold once the share price drops below a certain price.