How to Invest in Online Stock Trading
Online stock trading allows average people to invest and manage their own money. Although there is still the potential to lose money if you don't know how to invest, managing your own money at least alleviates the threat of being scammed by an unethical money manager. Starting out by investing in a simulator will greatly reduce your risk of loss.
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Instructions
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Start a simulated account. Before you invest any of your real money, you will want to get some experience in a simulator. This way you will know whether you have the skill to invest without any real fear of loss. Free simulators are offered by Investopedia, Marketwatch, and SmartStocks.com (see resources below).
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After you practice using a simulator, you will want to find a real broker. A few that you might consider are Scott Trade, AmeriTrade, and Etrade. These are online brokers that have all been around for more than 10 years. Whichever broker you choose, make sure it is a member in good standing with the Securities Investment Protection Corp., or SIPC, and the Financial Industry Regulatory Authority, or FINRA. These organizations oversee brokerage firms.
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Open up an account. Once you have chosen your broker you just need to fill out the online application and deposit some money. As of 2010, most brokers require a minimum deposit of $500.
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Learn to trade. There are lots of places offering free trading courses. Investopedia is a great place to begin since it contains free tutorials and mock exams. You also get could obtain a free e-mail trading course from TrendTrading.info, and TradingMarkets also has lots of free educational tools to get you started.
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Place a trade by entering the stock ticker symbol into your broker's software. You will then need to select whether you wish to do a market order or a limit order. A market order makes your purchase using the stock's current selling price, while a limit order will only make the purchase of a stock at a price specified by you. For example if the stock is selling at $35 a share and you want to wait until it pulls back a bit, you can enter a limit order at $34. That is exactly the price at which you will get your order filled.
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References
Resources
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