Thursday, June 18, 2009

Trading Stocks Online: Does the Ease of Use Make it More Dangerous?

The majority of American homes have at least one computer, and of those, most are connected to the Internet for at least one hour or more each day of the year. Because of the ease of having the entire world right there at your fingertips, more and more business is conducted from the home - from ordering Junior's birthday gift to performing job duties. It was only a matter of time before the financial world started grabbing some of the Internet action- now a large portion of every day's trading actions are performed online. Whether you go through a broker or execute your trade on your own, online trading can be an interesting way to manage your investments.

Because the Internet is there twenty-four hours a day, it can become very easy to get carried away by the whole online trading concept. Before you even log onto the first site, and before you even look at the first trade online, there are some things you must know and understand. Knowing these basics can make your online trading experience satisfying and hopefully, financially rewarding.

If you have never worked with stocks before it might be advisable to work with an online broker before going out on your own. The stock market should not be a learn-as- you-go experience, especially not with the current state of the economy. Do your research if you wish, but work with a broker until you are more confident in your own abilities.

You should talk with your broker about your own personal investment goals. Know what all of the risks are when dealing with the stock market. And by all means, know your own limits. Do not try to trade above your financial capabilities- if you choose the wrong stock, or the market fluctuates you can put your family in real financial danger.

Online trading can allow you to research and buy your stock in one simple step, or to do the research only, using a broker to buy the actual stock. Beyond the other tips that apply to all stock trading, both traditional and online, there are other special considerations for online trading, including knowing that you might not be able to instantly execute or cancel orders- both may be delayed by as much as a few hours. You also need to know if quotes and other information given is delayed or given in real time. (This will usually be clearly denoted on the stock site.) What are the limits to your trades- do you have a daily cap while working online? And because you are dealing with an entity that sometimes has technical issues, you must ask about website crashes and what that can mean to your ability to make or cancel orders.

Finally, before making your first trade with an online company, check out their privacy policy, find out about commission and transaction fees and review the customer service and complaint policy.

Article Written By J. Foley

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