How to Successfully Start Trading Online

Stocks

Trading online is referred to as the act of engaging purchasing and selling of financial securities or currencies over the internet with the use of brokerages proprietary trading platforms like CMC Markets. With increased number of discount brokerages, investing in the stock markets has become straightforward and convenient.Thus, online trading is a great alternative when it comes to long-term wealth; although it might take the time to sharpen your trading skills.

With the development of high-speed Internet, it has become easy to depend on online trading businesses for income. It provides a rich source of information, data analysis, and necessary tools that enable you to make a more informed decision. Most importantly, virtually no paperwork is involved in all transaction records online, and statements are always available in digital form. Almost anything can be sold or can get purchased online. May it be currencies, stocks, physical goods or commodities. Out of all these markets, the forex market is the largest. This mode of online investing eliminates the major outdo hassles of investing.

Anyone can invest any time, and from anywhere at their own time and convenience. It is equally easy to get up –to-date information and data analysis in the form of an investor friendly format. This information comes from some of the best information providers in their respective fields. The first step in getting started in online trading is completing an online registration. One registers as a member in an integrated 3-in-1 online trading account with a service provider. These accounts include:

  1. A trading account – an account that enables one to transact online.
  2. An internet enabled bank account – an account that allows online money transfers.
  3. A Demat account – an account where the shares can be deposited.

It is very common for traders dealing with trading stocks to lose money, especially new traders. This is because of lack of a clear understanding of the basics in the stock market. It’s very crucial to take your time to learn about different brokers, various trading styles, risk management, strategy and much more. For instance, in buying stocks, one should have the basic concepts of the stock market, the exchange rates that exist as well as what it takes to purchase and sell a stock.

Stock Brokerage

Firstly, one needs to decide on the stock brokerage to use. There are a few online stock brokerages available. They range from the full-service brokerages to discount brokerages. The full-service brokerages have brokers who work with clients to manage finances and investment while the discount brokerages which are much cheaper, allow clients to do the research and management on your own.

If you happen to decide to initiate an account from a traditional brokerage company, you will work hand-in-hand with a private stock broker. The agent will provide investment ideas, prepare your portfolio reports, give you a run-down of your investments progression, and be available anytime you need him/her. But this is typically for large investors since it costs a lot of money.

The best option is to go with Discount brokers since they are more like a do-it-yourself investor. They don’t offer investment advice but instead, they just execute orders once you’ve decided to buy or sell an investment. Also, instead of working with the personal stock broker, you will do most of your trading online, or you can place your orders through your phone.

First Stock Purchase

First, you identify a reputable stock to purchase; then you use the purchase basics such as Symbol Last Price, Bid, and Ask. Also, one needs to know the companies that are frequently traded by a lot of traders where the bid and asks spread is a little.

Stock Trading

When buying stocks, you must understand the order types. Reading the stock quotes involves understanding the last prices, previous prices and open prices of stocks. Below is a screenshot of a sample stock quote.

Afterward, someone identifies the market maker and the firms that own shares in a given stock. Market makers compete for the sale of shares to customers and quote the sell prices for a specified number of shares. Upon receiving an order for stock, the market maker then fills the order almost immediately from their inventory. Below is a screenshot of a Level II quote indicating the columns with the heading of MPID and market makers initials next to the number of shares in their portfolio.