Wednesday, June 9, 2010

Investing In The Stock Market Online

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Once you've studied stock market investing for while, you'll eventually get to the point where you'll have to start investing in the stock market online, for real. A long time ago, you used to enlist the services of a full service broker who would recommend what to buy, place orders for you and you'd pay a hefty chunk of change for their advice. Today, though, you have the luxury of making all of the decisions from what stocks to buy and when to sell them. Plus, you can do it from the comfort of your own home. This freedom to invest from anywhere has basically opened up a whole world of opportunity for people to make money in stocks. It's also done a huge service to the investment brokers as well because it lets them off the hook of doing the one thing they did poorly anyway and that is telling people when to sell.

This skill is the one skill you'll need to acquire in learning how to invest in the stock market online. Because without it, you'll lose money in your trading account just like they did for you. The only way you are going to learn how to invest though is by getting real world experience. What I recommend when first starting is only investing money that you can afford to lose. Set aside an amount of money that won't hurt you if you lost it. Start small, maybe with a $1000 bucks or so and start getting your feet wet.

If you are not comfortable starting with real money, then start with a stock market simulator first. This is extremely beneficial because you can work on your system of decision making first. Take the time to fine tune the set of actions you need to take from stock selection to the sale of your stock so that you have the mechanics down first. Look at it like playing a sport. Get in the gym first, then start playing some practice games, but finally take your game in front of the fans with real cash. Only with real cash can you add the most important ingredient that you'll need to be successful in making money in the stock market. That ingredient is emotion. The emotion of stock trading is the wild card you'll need to get a handle on.

Once you feel you are ready, you'll need to open an account online. You'll find a slew of online stock brokers to work with from Etrade to Ameritrade to Tradeking. I finally settled on Tradeking mainly because you can make a round trip in a stock (buy and sell transaction) for about $10. If you are started small, transaction costs will eat you up. Not only do you have to pick the right stock and lock in a gain, you will also have to cover your commissions that these online brokers will cost. You'll need a healthy balance between bare bones service at the lowest cost possible to the higher priced brokers and their fancy tools. Personally, I get the tools I need from the Investors Business Daily and don't feel the need for a lot of high tech tools that the online brokers provide.

Also, don't feel that once you start investing online that you have to stay with the same broker. You can always change as you feel your needs change. In the meantime, good luck!

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