1. Empower yourself with information and Education
Information and education about stock trading are the keys to success. Good brokerage firms provide lots of information and education on the pages of their websites. The education section includes explanations of key terms and concepts often used in stock trading. You get articles written by the experts on the subject, charts, news flashes and much more. They explain the process of opening accounts, funding the trades, withdrawing earnings, comparative charts of the brokerage commission, minimum trade amounts and so on. The pages include education on what is a stock, how it is traded, how the prices of the stocks are determined. The investors are provided guidance on the process of conducting research in stock which includes fundamental and analytical research with various research tools provided on the website.
Besides the information provided by the brokerage firms, the investors can collect a great amount of useful information from the internet itself. There are myriads of websites such as About.com and Wikipedia which provide huge amounts of free information through the articles written by stock trading experts.
You can also get online stock trading software programs which provide you with the ability to create technical charts such as bar charts and line charts. This information can help you to make an informed decision whether or not to invest in a particular stock.
2. Research about the brokerage firm
It is always advisable to do an intensive comparison shopping about the online brokerage firms on the internet before you open an account with any one of them. You may also seek the recommendations of your friends and relatives who are already engaged in online stock trading. The salient points for consideration should be the commission, the quality of the services and the trading facilities that various brokerage firms offer.
3. Read the terms and conditions on the agreement
Never forget to read the terms and conditions on the agreement which you are supposed to sign before opening your account. Remember you are investing your life’s earnings and are entering into a trade to earn your living or make money from it.
Sometimes the ISP services of the brokerage website break down due to technological problems. You should ensure that your broker provides you telephone services to receive your instructions to buy or sell the stocks.
Also check that your brokerage firm offers real time stock trading services to enable you to use the current stock market prices to buy or sell your stock.
Make sure that you just deal with your online broker and not anyone whose services the broker may be using as third party service provider.
If you want to trade on multiple stock exchanges, make sure your brokerage firm has the capabilities to provide for your needs and execute your instructions accordingly.
Once you have decided the goals that you wish to achieve with your online stock trading program, you need to stick to your investment plan in a disciplined manner. Use your exit strategy whenever you have to in order to protect your investment.
Do not invest in online stock trading more than you can truly afford to lose. It hardly needs to be mentioned that stock market investments are always subject to risks generated by the unpredictability and volatility of the stock market.
As mentioned earlier, you must acquire some working knowledge of technical analysis of stock market movements. For this, you may need to understand candlestick and bar charts, trends, moving averages, and stock market volume to analyze the stock market trends.
You must learn some basic tips about determining the continuation pattern of a stock chart. This will allow you to easily decide whether or not to sell your stock. The technical analysis will also facilitate your understanding of the liquidity of a stock before you decide to buy it.
The charts will provide you the much needed critical information about NASDAQ and NASDAQ Order Routing System to enable you to place your orders correctly. The analysis of the charts will also help you to predict whether a stock price is taking up turn or down turn.