Learning how to trade stocks online has many components. The two main areas that we need to focus on is the practicalities of trading and then also the skill and know-how that comes with being a good trader. When you first start trading it can be overwhelming when you look at the stock market and think how you can even start making your first trade. With the internet its actually very easy to buy and sell stocks and the practicalities of trading is very simple. Lets quickly look at that.
The first thing you need is a trading account with an online broker. Your online broker is your link to the trading floor and they will handle the actual purchase and sell orders for you. They charge a fee per trade and this fee varies from $5 to $20 per trade. To open an online trading account you need to be a US resident (if you want to trade the US markets) or file some additional paperwork if you are outside of the USA and want to trade the US markets.
Most online brokers require a minimum deposit of $1000 into your trading account. It acts very much like a bank account and you can connect it to your actual bank account to make transfers to and from your trading account easier. All online brokers are subject to the same legislation and are heavily regulated. This is good news for you because it means that your money is safe with them and that they can’t screw you over with hidden fees and charges. You need to make sure that you read the terms carefully though.
Once you have your trading account set up you can simply log in and start buying stocks on any of the major exchanges in the USA. The two main exchanges are the New York Stock Exchange and the NASDAQ. There are thousands of stocks being traded on these two exchanges and you can trade any of them.
Placing a trade is easy. All online brokers have good instruction videos that show you exactly what to do to place a trade. On a more general level, you simply need to pick a stock that you think will go up in value, check the price and then place your purchase order for the amount of shares you wish to purchase. The purchase order usually gets executed immediately and this means that you buy at the quoted prices in “real time”.
To sell a stock you simply go through the same process. Some people like using software to analyze stocks. There are a number of highly sophisticated programs that you can buy that will help you identify trends, patterns and other indicators. Some online brokers even give you their software for free.
Its easy to get caught up in learning software. It can be overly complicated and getting lost in the details of learning a software package is not the best way to start trading. The real skill of how to trade stocks online is in picking stocks and knowing when to buy, when to sell and when to hold. This requires an understanding of how stocks behave.
Stock prices are nothing more than the reflection of the perceived value of a particular commodity. Actual value has very little to do with it as traders are only concerned with what the perceived value is. This partly reveals why there are certain set patterns in stock behavior because its a reflection of human behavior. What this allows us to do is to look at a stock and analyze it in different ways and based on certain principles we can “predict” with relative certainty what a stock is likely to do in the near future.
When you treat trading as gambling then you are doomed to fail. When you treat it as a science then you may succeed although there are not guarantees. It does however give you an infinitely better opportunity and allows you to study what works and apply working systems to your trading efforts. Those who succeed on the stock market are those who are able to implement systems and methods in a scientific manner.
If you want to learn how to trade stocks online then I suggest you start with a good course or find a good book that can give you that fundamental understanding and teach you some basic systems to use in picking stocks. One book I can recommend is A Beginners Guide To Day Trading Online by Toni Turner. Its easy to read and will give you a good platform. I can also recommend The Market Guys – I love their approach to trading and AJ Monte is one of the most respected teachers of traders.
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