What Is Online Trading?
Online trading means using the Internet to buy and sell investments such as stocks, options, bonds and mutual funds. Aside from privacy and convenience, online trading dispenses with cumbersome paper documents and long phone hold times, and allows you to manage your financial transactions with a few mouse clicks.
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Online Account
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Set up an account with an online broker such as Charles Schwab by filling out an online form that can also transfer funds from your bank (see Resources). After waiting a few business days for the transfer to complete, you'll be able to execute trades and research investments by choosing options and entering numbers on the Web.
Updated Research
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Price changes in the value of an investment are instantly displayed on the research page, allowing you to take advantage of minute-by-minute price fluctuations to make money.
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Speed
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Order execution is nearly instantaneous, and allows for stable price quotes. The cost of a fast-movement stock is unlikely to change between the time you place an order and when it is executed.
Best Investment Prices
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Whether you're buying one stock or selling millions, your order is immediately seen by millions of traders who can give you the best and most accurate price.
Dangers
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Cutting out a human middleman reduces commissions and makes execution efficient. However, because nobody else takes charge of your transactions, misplaced digits or other typos can be instantaneous, costly and irreversible.
Practice Makes Perfect
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To practice free online trading in the real market without risking a penny of real money, set up an account with a paper trader such as EZTrading Club (see Resources).
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