How to Trade Stocks Online

The world of stock trading has certainly changed a great deal in the past twenty years. Once the domain of Gordon Gekko-style investors, complete with large glass-plated offices and high-rise banking conglomerates, it’s now an every-man’s game, with everyone boasting a home computer and internet connection able to buy, sell, trade, and carefully invest in public company stock.

From the NASDAQ to the DOW, all the way to international exchanges and overseas markets, all but the most vague and inaccessible stocks are now easy for investors to purchase. With online software and trading platforms built for the specific purpose of making it as easy as possible to trade, there is no excuse for failing to capitalize on the huge amount of money to be made in trading stocks online.

In this guide, we’ll look at how the stock market has changed in the past decade – how it’s now the ultimate investment opportunity for small investors, how it’s relatively more affordable to start out as a stock trader, and how much potential there is in the world of trading itself. We’ll also look at a selection of ways to start trading stocks online, and how each one can benefit you as a trader.

But first, let’s look at the origins of online stock trading – itself a relatively new and modern form of trading. While stock trading is nothing new – the stock exchanges we use today have been in use for over a century – it’s only recently become something that anyone can get involved in. A new type of investment for some, it requires some careful strategy to produce strong long-term returns.

Investing in stocks isn’t like investing in property or skills – it’s a high-risk game, and one that can change in the blink of an eye. The value of a company can rise or fall, particularly for stocks with a low original value. This means that many people become immensely rich on the stock market, while many others lose a great deal of their original investment capital during periods of poor returns.

As such, you need to research before you trade any stocks online. Thanks to research and analysis tools provided by Google Finance and Yahoo Finance, this is a fairly simple process. By taking a quick look at the past performance of a stock, the company’s respective earnings and profits, and its history as a public company, you can determine roughly how secure and reliable a stock will be.

Of course, this isn’t foolproof or certain, but it is a good way to tell how a stock is likely to perform over the long term. Companies that have experienced rapid downwards and upwards value changes in the past are likely to experience similar instability in the future. For some investors, this is a great thing – for others, it’s the type of volatility and unreliability that’s best avoided.

Then, there’s your trading platform. Once you’ve gained an understanding of the type of stock you’d like to purchase, you’ll need to create a trading account at an online stock brokerage in order to buy it. One of the largest stock brokerages online is called eTrade. For the purpose of this guide, we’ll be using it as our benchmark for online stock trading.

There are a variety of online stock trading brokerages out there, almost all of which offer a similar array of features and services. Users can track their stock holdings in real time, assessing their true value and growth as it happens. This allows you to keep a close eye on your stock – a necessity for day traders and other stock traders focused on short-term value growth and loss.

In a simple stock trade, you’re aiming to see your stock increase in value. Using eTrade or a similar online stock trading platform, keep an eye out for growth in your stock. In many cases, you’ll find a stock that grows a significant amount over a short period of time. This is a good thing, and it allows you to make money by selling the stock once its value reaches a desired high point.

Keep in mind that eTrade, and all other online brokerages, will take a small commission from your account in exchange for their services. It’s important that you calculate the cost of this commission, particularly when considering your total earnings from a stock trade. It’s not uncommon for a low-margin trade to lose its income due to onerous fees from an online or offline stock brokerage firm.

There are multiple ways to trade stocks online. Many traders, particularly those with an eye for the short-term details of stock, aim to complete their trades within a single day. This is known to most as ‘day trading.’ Others, particularly those that trade as a hobby or side investment, prefer to focus on the long-term growth of stocks, looking at long-term trends instead of day-by-day activity.

Whether you choose to focus on the near or long term, trading stocks online can be a rewarding and lucrative investment. Despite its inherent risk – and believe us, there is a risk there – buying stock at the right time can produce long-term wealth and financial stability. With the internet and research on your side, that’s long-term wealth that you can spend the rest of your life enjoying.

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