- Difference between Investing and Trading
- What is online trading?
- Benefits of online trading
- How to start an online trading portfolio
- Difference between online and offline trading
- What are trading platforms?
- How to do online trading?
- What is fundamental analysis and how to do it?
- What is technical analysis and how can you do it?
- How to select best stocks for trading?
- Show all articles
How to do online trading?
For a long time in the pre internet era, and in fact, much of the early internet era, when a person had to buy or sell financial instruments like bonds, shares, etc., they needed to call their brokerage firms and ask them to make a trade for them. With that came a long drawn process of informing the price, checking whether the deal is right or not, and finally confirming it.
- Online trading is much more simplified. A person can buy and sell securities simply by registering on an online trading platform.
- Research and study are the pillars to becoming a master player in the field of trading stocks.
- Reliability is equally important. You don’t want your broker’s servers going down during peak hours and causing you unnecessary loss.
Thank God online trading happened. Online trading is much more simplified. A person can buy and sell securities simply by registering on an online trading platform. Internet based brokers are everywhere now, and anyone can easily buy and sell without any hassle.
Learning to Trade Stocks
Sure, there is no guaranteed formula for becoming an expert in trading stocks, but trial and error, coupled with research, thorough and deep analysis, and experience can make you a decent player. So, the question is, how do you exactly trade in stocks? The following tips will prove helpful for a beginner:
- First things first, you need to study. Until you don’t know what is stock market trading, you cannot become a part of this show.
- To simplify your work, you can consider getting a broker. There are a number of authentic brokers available online. Never invest in what you don’t understand. Active research and analysis will guide you through.
- Don’t try to invest money that you can’t afford to lose. Success is not always guaranteed even after taking precautions, hence cut your coat according to your cloth. You can even diversify your investments by putting your money in different stocks.
- Discipline is the key to success. Buying the right stocks at the right time can happen only when you are disciplined enough. You need to follow it religiously.
How to choose stocks
Research and study are the pillars to becoming a master player in the field of trading stocks. But researching and choosing the right stock is also not an easy task.
There are basically two kinds of analysis -
- Fundamental analysis is the examination of views of public and the financial reports of a company to know its health.
- Technical analysis is an art, in which the analysts detect a pattern in the rise and fall of a stock and reap profits with the help of that pattern. A combination of both these techniques can help a person to identify the most suitable stock.
Choosing a Brokerage Partner
You know about the dos and don’ts, but what about choosing a brokerage partner? Certain factors must always be kept in mind while choosing your broker, because finding the right stock broker is parallel to finding a right partner.
- Availability - It is vital for a stock broker to receive information regarding all activities like the trades, margin, profit and loss, etc.
- Reliability - Reliability is equally important. You don’t want your broker’s servers going down during peak hours and causing you unnecessary loss.
- Alternatives - Your broker may turn out to be reliable, but it can difficult to ascertain the same for your own internet connection. Therefore, look out for a firm providing alternatives to online trading, for example call and trade facilities. Even discount brokers who specialize in online trading have contingency plans that offer call-and-trade services in case of emergencies etc.
- Research - As mentioned earlier, you should always research about the stocks you want to buy. Similar research should be done while choosing your broker too. You must be aware of the broker’s background before choosing.
- Products Offered - Beyond offering you a stock trading platform, there are other services that a discount broker can offer at the same extremely competitive rates, such as a chance to participate in the derivatives market (futures & options) etc, charting tools to help your analysis, and more. Before picking a broker, do check the services offered.
Making Trading Decisions
Wise investment and trading decisions will lead you to profits and foolish decisions can make you broke. Therefore trading without thinking is not recommended. It is important to decide your to-do list and your DO NOT DO list!
- The first thing that you should do is sit down and analyse how much money are you ready to invest and how much can you afford to lose. If you invest without this perspective, you might end up losing everything.
- Making money is not a cakewalk. It is necessary to realise that there are risks involved and all investments are risky to a certain degree.
- It is not always your luck that makes you lose money. Many-a-times, it is your lack of knowledge. Hence, it is appropriate to first thoroughly study and then start investing.
- If you are thinking of becoming a full time investor, do consider maintaining an emergency fund.
- Strike a balance between your financial goals & market performance. - while instinctive decisions taken on a whim may or may not work, a well-researched call from reliable inputs is very likely to succeed in the long term.
- It does not matter whether you are performing trades online or not, you cannot start investing without researching.
- You should always have a roadmap according to your financial status - how much can you invest and how much can you lose comfortably.
- Finding the right broker is crucial, and while it may be challenging, it is definitely something worthy of your attention and time.