In this article, we’ll recap the steps necessary to buy stocks and start trading online asap.
Step 1: Learn, learn, learn!
Okay, that one is obvious, but yes, you should learn as much as you can about economics, stock markets and everything in between. It is mandatory!
Step 2: Determine you stock trading profile
Now that you’re certain that online stock trading is right for you, find out what kind of investor you are. How much risk can you tolerate? Would you prefer lower performance in exchange for more steady income, such as periodic dividends? Do you wish to make certain ethical/personal choices when trading stocks? Make sure you have the knowledge and resources necessary to reach the objectives required by your chosen profile.
Step 3: Find your stock trading system, your rules
What kind of stocks will you be buying? When will you buy and sell them? Most important, why? Find out as much as you can about what is typical of your trading profile, and make yourself some reasonable rules that work with it. Try your system out in a stock simulator, such as Investopedia’s.
Step 4: Shop for your broker
Finding the right broker is a big step. It will determine the quality of the services, resources and advices you will have access to once you start trading stocks online. Some online brokers will offer completely raw trading services, with absolutely no advice and little customer service. This comes down to far cheaper than full-service brokerage but if you feel that you need some advice, shop accordingly. Also, while most brokers can take care of currency conversions and deal with a wide array of stock exchanges, make sure yours can do this as well (if there are particular stocks you wish to trade, ask them if they have access to that market – and what are the fees). Don’t hesitate to try out their customer service to gauge their reaction time, and if they have a free trial offer, why not try it out first?
Step 5: Contact your broker for your application
Be aware that there will likely be a delay before your trading account is operational. You will have a few forms and documents to fill out, online and offline, and perhaps have to send a deposit. Follow the broker’s instructions.
Step 6: Select your stocks and start trading!
In determining your trading profile and strategy, you pretty much narrowed that field down quite a bit. From there, you must now find the key pieces of information that are relevant to you and stay updated continuously. A few obvious choices, for most stock traders:
- The Wall Street Journal: a fantastic birthday gift to ask. Or try their free online edition.
- MarketWatch: the Wall Street Journal’s little brother can be found online, for free.
- The Motley Fool: The Motley Fool is famous for its newsletters and stock picks, and also has up to date market coverage as well as an active online stock trading community.
The list could go on and on… The web is filled with information, it will be up to you to filter the sources that are right for your strategy!
Step 7: Stay disciplined?
Alright, you knew that one, but it’s true! Follow your game plan and stay focused. Don’t make decisions based on emotions. Be patient. If you have a few thousand dollars in your account, it will be hard to not invest them right away, but remember that timing is critical. The real profit is not made when you sell, it is made when you buy.