Trading stocks online allows you to take full control of your stock trading and investments from anywhere that you have an Internet connection. In our guide, we’re going to outline how beginners can start stock trading today:
Choose an Online Trading Platform
Investing will require you to have access to an online trading platform. These platforms allow you to:
- Analyze stocks
- View trends
- Conduct trades
- So much more
Here are a few of the top platforms to consider:
- Tradingview
- Metatrader 4/5
- cTrader
- rtrader (stockstrader)
You’ll want to consider each of the platforms above based on what they offer: education, research materials, active or future trading and requirements for joining.
Understand Fees for Trades
Investing comes with a cost. You’ll want to review each of the platforms above to learn about the following fees:
- Base fees
- Per-contract fees
- Transaction fees
- Transfer fee
- Etc.
Ideally, you’ll find a platform that offers the most flexibility while also offering low fees. Fees are a necessity for these platforms to exist, but they will certainly cut into your overall profits.
Research, Research, Research
Whether you plan on day trading or following the buy-and-hold strategy, you need to be on top of your research. Take the time to learn about:
- Economic factors that may impact markets
- Company leadership and forecasts
- Stock historical performance
- The company’s future plans
You need to do your due diligence for the stocks that you plan to trade.
Manage Your Risk
Investing always comes with its own set of risks. No one can predict the market with 100% accuracy. You need to learn how to manage your risk, which will be based on the type of trading you conduct.
Here are a few risk management tips:
- Diversify your holdings, even if you plan on day trading
- Determine the amount of capital risk you can afford for each trade
For example, if you have $10,000 to invest in stocks, you may want to purchase 20 stocks so that you risk just $500 lost for each position. If you’re day trading, most traders will have a cap of 1% to 2% risk, meaning they wouldn’t invest more than $100 – $200 on a single position.
Stay Away from Penny Stocks
Penny stocks are enticing to new investors because they’re cheap and seem like they can make traders a lot of money. However, these stocks are not listed on the major stock exchanges, meaning that they do not have to follow the same disclosure standards as listed stocks.
A lack of transparency can put a new investor’s capital at major risk.
If you plan on trading penny stocks, be sure only to invest money that you can afford to lose.
Stick to a Plan and Keep Emotions Calm
Finally, you’ll want to learn how to tame your emotions and stick to a plan. If you have an emotional attachment to a stock or you get upset every time the market goes up or down, it will impact your ability to trade like a professional.
You want to stick to a plan when trading stocks, whether this means following a buy-and-hold strategy or reducing losses with limit orders.