Your First Online Stock Trading Account
Once you open and fund an online stock trading account, you’ve committed yourself to financial trading in a way that no other action does. Perhaps you’ve read about investing and trading in shares, options, futures and so on, and maybe mapped out a business plan and set targets. But actually parting with your money and using it to buy and sell stock market securities is the watershed.
How successful you will be in online stock trading is governed not just by your own trading activities. It’s the kind of account you opt for and the broker you choose, as well. Most people open their first account with a discount broker. Here, the trader simply uses the broker’s facilities in order to place, amend and close his own trades without even asking the broker for an opinion. It’s the equivalent of the old “execution only” account. But is this the right account for you as a beginner?
Bear in mind that you are probably starting with a modest sized account of perhaps $2,500 to $5,000 and your knowledge of the stock market and its mechanisms is limited. This means you have to be cautious, at least until you are familiar with the online stock trading environment. You also need as much help and advice as you can get, but of course this comes at a price. You could opt for a full-service account from your broker, which includes advice, sometimes pro-active. But although prices have come down considerably in recent years, this can still be expensive, and it isn’t necessarily what you’re looking for.
Most new traders rely largely on the wide range of information available, often free of charge, on the internet. Forums and brokers’ sites are good sources of this information, much of which not so long ago was available only to full-service account holders of certain brokers.
Information from other sources is available if you are prepared to pay for it, but its quality and accuracy is sometimes open to question. That’s why it’s so important to have an account with a reputable online stock brokerage that has reliable information readily to hand on its web site.
As to which broker to start with, someone like Charles Schwab, if you’re in the United States, is ideal for a beginner. If you’re in the United Kingdom then probably Barclays Stockbrokers would be hard to beat. You could look at other market leaders like E*Trade, Fidelity and Scottrade to see which one you feel most comfortable with. Check them on your favorite search engine and on the stock trading forums and sites such as Investopedia for any opinions from existing customers.
Whichever broker you choose, it is vital that you don’t follow any untested advice, wherever it originates from, unless you can somehow validate it at no risk to yourself. For example, a new trading strategy can be tested with a demo account so you don’t risk real money. The only problem with that is the time it’s liable to take.
Probably the best thing you can do as a beginner is to find a successful online financial trader and see if he will teach you his methods. This may mean some financial investment on your part, but it will pay off handsomely. Just click through to our home page, fill out the form and click on Submit.
Philip Gegan
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