Stock Market Analysis - Learn to trade stocks online

Wednesday, June 6, 2012

How to trade stocks online

How to trade stocks online

The first step in trading stocks online is to open an account with a stock broker account. There are many quality discount online stock brokers out there that you can use. Scottrade and Thinkorswim are two pretty good online brokers.

After you open an brokerage account, then you are ready to trade. However, keep in mind that brokers charge a transaction fee whenever you buy and sell a stock. The transaction fee for Scottrade is $7. So that means you need to have at least $1,000 to start trading or the transaction fee will eat you up. Let’s do the math, if you invest $1,000 and your stock rise 10% so now you have $1,100 in your account. The $100 bucks you gain doesn’t include the transaction fee yet, so if you minus the $14 transaction fee, you end up with a gain of only $86. Now imagine, if your stock lost 10% and you are now down to $900 in your account. You still have to pay transaction fee of $14 so you end up with $886, so you lost $114 in your account.
Also, you need to be aware that there are slipperage fees when you buy and sell stocks. With that being said, retail traders have a disadvantage and you must be ready to invest at least $2,000 in order to see substantial gains.

After you open a trading account, you should start paper trading and make sure you know what you are doing or else you will burn money really fast in real trading. To gain an edge in the stock market, you should study how the stock market works. I recommend you pick up a few books on technical analysis. Technical analysis helps you predict the stock price in the short term which allows you to take profit of short term stock movement. You can start with my free stock market ebook call the “Stock Market Winners”.
For stock market beginners, I recommend you to follow a few stock market blogs and participate in forums and see how other people trade. However, never take other people’s advice as buying or selling signals. You should always do your own research and make your own judgment when it comes to trading. You must devote time into study and constantly learning new things about the stock market and take notes on what works and what’s not working for you.
Remember, there are speculators who go broke and get knock out all the time in the stock market. The main reason is they treat stock trading the same way as gambling. They are not discipline and therefore they are not trained to be successfully in stock trading. 

Cick here to learn more about stock trading online.