Online stock trading is a very fascinating sphere of business. Stock trading has the potential to create huge financial returns for investors but it can also be risky terrain for those with limited know how. Below are some tips which can assist those who wish to venture into online stock trading.
Choose Your Trading Style Carefully – Give plenty of thought to what kind of online stock trading you want to do. Would you prefer day trading, where you close out every trade at the end of each day? How about short-term trading where you are in a position several days at a time? Have a clear idea of the style of stock trading you prefer before you start.
Match Your Trading Style To Your Lifestyle – Your choice of trading style is especially important from a lifestyle perspective. Day trading usually means you will be at your computer for hours at a time. Long term online stock trading doesn’t require as much attention. As a rule, the shorter the time frame the more intense the trading.
Select A Broker That Matches Your Trading Style – The type of online stock trading you choose to do will determine the type of broker to use. Day traders need high-speed direct access technology. Short-term daily, weekly, and monthly traders can use less sophisticated discount brokers. When it comes to broker fees and other costs, day trading is the most expensive.
Make Sure Your Trading Method Works in All Markets – The stock market doesn’t just go up. It goes down too – sometimes for months or years. Use an online stock trading method that takes advantage of both down-markets and up-markets.
Use A Low-Risk High-Reward Trading Method – Stock trading involves risk. Most people inflict serious damage to their trading account before they learn how to win consistently. Though it may not seem glamorous, risk management is essential for successful online stock trading. The only way to get the reward is to control the risk.
Trade The Best Stocks – Superior stock selection takes advanced skills and extensive research. Unless you are extremely skilled with lots of spare time, it’s usually best to seek the advice of a professional. Avoid big brokerage firms and mutual funds. Facts show that most of their trading “experts” end up losing money.
Know When To Sell Your Stocks – Everyone focuses on what and when to buy stock, yet few ever consider the best time to sell. Paper profits only become real money when you convert them to cash. Don’t let your stock gains disappear due to neglect. Plan ahead before you get in, always know the specific conditions that will signal when it’s time to get out.
Timing is Everything –The best period of the month for stocks is 18th to 22nd because that’s when cash flows into the market (from pension funds and dividend reinvestment) tend to be at their low ebb, along with prices. The best time of the month to sell is during the first two and last two days. Also, you should be an aggressive buyer during the months of September and October, when the market has a strong seasonal tendency to bottom. Plan to do most of your selling in April and early in May.
The above tips should certainly make stock trading a pleasant experience.