Sunday, December 14, 2008

Trading Stocks Online - 10 Steps You Should Follow to Get Started Day Trading

Online Day trading - Sounds fancy or prestigious in some way. If you talk to someone who has been day trading online for several years, odds are that what they tell you will be over your head if you are just beginning your online stock trading. This guide is meant to serve as a stepping stone for beginners to help you get started, but also a "refresher course" for the seasoned day trader, as many of the trading ground rules rarely change. I've been involved in stock trading online for a couple years, although somewhat sporadically. Even for the beginner or professional, there are many resources available to help improve your "sixth sense" for the market.

1. Services for Trading Online

There are many services where you can set up brokerage accounts to begin day trading. Many have similar features, while each may expand a little in different areas. The best thing to do when finding a service is to visit the website and just try it out. See how you like the look and feel of the site, and use the resources that the site provides to get a feel for the main account area, and also the trading area. The service you choose needs to be familiar and comfortable to you, so that when you are making your trades you are confident with using the service.

2. Set Up Your Account

Well, this is an easy part of the formula. The worst part of this is the long forms that you are supposed to read concerning the markets and notices, and other legal forms. I would recommend printing this information and reading through it so that you will have a better understanding of the rules for the market. Once you have your account activated, there is usually a process to add a bank account and get it verified so that you can fund your account. This may vary with brokerage, so you have to read the rules to get set up.

3. Get the Feel of the Trading Area

This part is very important. Most online brokerages have tutorials and sometimes even videos that show you the basics of their site. Always make sure to look through the Help file for the brokerage if you get lost or do not understand certain terms on the site. After all, browsing and reading the help section is usually the fastest way to figure out anything that you don't understand on a website.

4. The Three "R's" of Trading

Research, Research, and Research some more! It sounds redundantly repetitive, but don't be fooled into thinking you can win this war (see next step) without knowing what you are up against. Knowledge is the best tool in your arsenal, so make sure you are doing your homework!

5. Choose Your Warriors

You are the General. The investments that you choose (in this case the companies you invest in) are your warriors. And this is a battle that you will want to keep a close eye on. It is your hard earned money at stake. Sometimes you may lose a battle, supposing that the company you just invested in goes belly up, but the whole point is to make sure you win the war! You are not just investing to have something to do during the day (or are you?). This money may be your retirement fund if that is what you have planned.

6. Practice Trades - Break Out the Play Money!

This step is actually quite fun. If you will check out my resource box below, you will find a link to a website that has many resources on it, including a place that I use where you can set up a "play money" account and see how you do with investing. So a company you bought into took a dive towards the big zero? That's alright, there is a handy dandy reset button to start over! Too bad you can't do that once you get into the real money...

7. The Opening Bell

I have heard many people say that they make their trades before the opening bell of the day, because trading during the day can get very emotional for the investor. Don't let your emotions be a factor in your investments! If you follow my guidelines and do your research, you are much better equipped to make decisions without emotion. As I mentioned earlier, the best tool you have on your side is educating yourself about the market, the companies, running the numbers, and knowing your exit strategy. You will begin to develop your own system of investing and studying as you go along.

8. Think You Got It? Now for the Green!

Here's where the magic happens. Once you have educated yourself on all the points I have made, and any other areas you find you need to know about, you can fund your brokerage account and get started with your investments. If you feel more comfortable playing it slow at first, then just start out with a small portion of your total investment capital and go at your own speed. Just remember to never get in a hurry, and never let your emotions affect your investment decisions.

9. Risk versus Reward

In the world of online stock trading, there is a delicate balance that poses a decision all investors must make. This is the decision of Risk versus Reward. Under most circumstances, the more risk you take, the more reward is possible to achieve. However, with more risk, you could also end up losing a lot more of your hard earned money. Each person must decide for themselves the amount of risk they are willing to take on a trade, and, as mentioned earlier, this will affect the choice of companies that you are willing to trade on. Which brings us to the final (and probably most important) step in this series...

10. Keeping Your Sanity!

Now I know this sounds funny, especially to anyone who is new to stock trading. But on a serious note, some people take on too much risk while looking for that great payout. To many new stock traders, the idea that your money is floating around out there in cyberspace and it's fate is attached to some company that you may have never seen, can be scary. Balancing the risk and reward equation to a level that you are comfortable with is something that just may help you sleep better at night.

So now that you have a step-by-step idea of how to get started, all that is left is to go for it. But as a good rule of thumb, I always tell anyone looking for an investment that they should never risk more than they are willing to lose. And of course, if you don't feel comfortable making the choices of investments, stay in that practice zone until you are comfortable with it. If that still does not help you, you should seek the advice of a professional broker, and perhaps the service you choose has people available to consult with you. Always use all the resources that are available to you, and your investments will be based on a very well researched decision.

Check Out the Related Article : Online Forex Trading

Stumble Upon Toolbar


Other News

Do You Have Website and Want to Link Exchange With Me ??

Click Here to Know How you can Link Exchange with Me