How to Start Trading Stocks Online
Investing is an integral part of wealth building. One has to save to invest and invest to grow. With internet becoming part of our life it is easier than ever before to trade stocks. Trading online has become the standard way of stock trading for an average person. In the internet there is a lot of information available to research the company you want to invest in. Once you do your research and pick the company, you can easily trade stock online. The following steps explain the process of trading stocks online.
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Instructions
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First choose an online broker. This is the first thing to do before trading stocks online. There are several online brokers available to choose from( see resource section). Choose the one right for you. If you are a beginner,it is better to choose discount brokers that allow you to trade for relatively less transaction fee.
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Once you choose the broker to trade stocks online, set up an account with the broker. Fill in application forms from their website and mail them to the address provided. Attach a check to fund the brokerage account. Normally the minimum balance required is between $2000 to $5000.
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You will get a notification from the broker when the account is setup and activated. Now you are ready to trade online.
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You can log in to the account and start trading online. To buy a stock online, you should input the ticker symbol of the company and input the amount of shares you would like to purchase. Along with the number of shares, specify the price you are willing to pay. If you do not mention the price, the broker will buy the shares for the market price at the time of your order. To be in safer side, it is better to mention your price, which is called a limit order. This way you know what price you are paying. If you place your limit order, broker will buy the shares only if someone is selling shares at that price. Otherwise your order will not be executed.
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To sell the stock online,follow the same procedure. Before you can sell the stock, first you should be owning it. When you put the sell order online, mention the expected price for the shares. In a limit order your shares will be sold only if any one is willing to pay the price you expect.
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Tips & Warnings
You always input the price of one share. For example, if you are going to buy 100 shares of company ABC at $10.00 per share, you input the price as $10.00 and NOT as $1000.00 which is the total amount you will pay.
You can setup an electronic fund transfer between brokerage account and checking account for quicker and easier fund transfer.
Do thorough research before investing in any company.There is risk invoked in trading stocks.
Avoid frequent trading online. For each transaction you have to pay a fee. Frequent trading will incur lot of expenses in fees.
