If I Learn Online Stock Trading, What Are the Benefits?Before you begin to learn online stock trading, it's important that you understand the potential benefits. Here they are, in no particular order:
1) You pay low commissions because you are using a computer as your broker (instead of paying the salary of a Wall Street guru).
2) You can do it from anywhere in the world. Once you learn online stock trading, you are no longer confined to an office. As long as you have an internet connection, you can log on and make your trades.
3) You can make trades in real time. In the old days when you worked with a human broker, there was a time lag between the time that you decide to make a trade and the time that the trade was actually executed. You needed to call your broker and have him or her process the trade manually. Now, with the click of a button, you can execute the trade yourself almost instantaneously from your computer. This could be the difference between making a profit or losing a lot of money.
If I Learn Online Stock Trading, What Are the Risks?Investing on the internet isn't all fun and games. Once you learn online stock trading and begin doing it, you'll likely face the following risks:
1) You can lose money. This is the big risk that a lot of people don't understand. Many people think that once they learn online stock trading, they are invincible. Unfortunately, this isn't the case. While you may get lucky or find a strategy that works, there are finance experts who are always in the game with you. Their presence makes it difficult for you to succeed easily. Don't let this discourage you, however. It's still possible to make money if you work hard to educate yourself.
2) You could become a gambler. Although many people begin investing with a conservative approach, it only takes a quick win or loss to throw you "off the wagon." If you don't maintain your thoughtful approach right when you first learn online stock trading, you could find yourself throwing around money hoping for a big score. The problem with this is that it's similar to a game of blackjack. You are making moves that don't have a positive expectation. In other words, you are not taking the time to do your research, and outside of getting lucky, you're playing a losing man's game.
Now That I Know the Benefits and Risks, How Do I Actually Learn Online Stock Trading?Once you've grasped the benefits and risks of investing, it's time to actually learn online stock trading. There are a number of great ways to do this, and here are some good ones to start with:
- Read books about investing. Although you may have your online stock trading account set up, you need to learn about the basic principles of investing. Check out Amazon.com and do a search for investing books. Read reviews and explore the ones that seem to be highly rated. Before you can really learn online stock trading, you need to have a grasp on the vocabulary you'll soon be exposed to.
- Interact with other via internet forums. Internet forums contain some of the best knowledge on virtually any subject (although be aware of many false information out there as well!). Many of them cost money to join, but there are also some great free ones that include MSN's Money Forums and TalkStock.com.
- Talk to your friends and family. It's quite possible that someone you know currently invests on the internet, so they may be able to give you recommendations on how they began their quest to learn online stock trading.
- Get first-hand experience by starting small. You may wish to get your feet wet with penny stocks, or perhaps with larger, safer companies (however you should only buy a small number of shares for these since they will be more expensive) while you begin to learn online stock trading.
- Read the news. It may seem simple, but the market is heavily influenced by today's news. Staying in touch with what's happening in the world could give you an edge when you go to invest in a particular company.