While online trading is a quick and convenient way, it takes a lot of time, effort, and patience to master online investing.
In the space of a decade, the internet has changed the way we manage our finances including investing. Managing your money and assets with the help of digital technologies is now easier than ever, so is online investing. With just a few fingertips on your smartphone screen or a few clicks of your mouse, you can now buy and sell stocks, bonds, currencies, indices, ETFs, commodities, and many other holdings.
It’s not without its drawbacks though, the most prominent of which is the time or lack thereof. With investing online getting so easy, you may overlook the importance of diligent homework needed to make a sound investment decision. Therefore, you have to be extra careful and utilize all the risk management tools provided by your trading platforms. Knowing why you are buying or selling as well as the risks associated with each of your holdings is always a good place to start, but that’s not all. Below, we discuss some of the simplest steps to take to avoid making some of the most common mistakes of online investing.
Know your broker comprehensively
Is your preferred broker regulated by legitimate financial authority? Do they offer any security for your deposits and holdings? What securities, features, and resources are available in the platform? Are the investment instruments properly optimized for your investment habits? These are the basic questions every investor should ask before deciding to conduct their investments via a particular online stockbroker or platform. Then, there are also the terms and conditions regarding fees for investing in any individual asset class, overnight holding fees, interest on leverage, maintenance fees, etc. The more you know, the better you can control your expenses.
Set a price limit for anything you invest on
As an investor, it is expected that you would have a price-action strategy in place to invest in any individual stocks, commodities, or anything else. But, how to ensure you buy a stock at your preferred price point? The trick is to place an order for when the price hits your limit or the base, not market orders. Because a market order would execute your order at the first opportunity when the market opens. You may miss out sometimes as your limit order may not get executed if trading begins and remains on a higher price point, but it’s certainly a better and less-risky strategy for online investing.
Double-check each of your actions
Depending on the volumes of trades and active users using a platform, some of your orders may not get executed as smoothly as you would expect. So, whether you are placing an order or canceling one; make sure it has been executed before attempting to perform another action. Also, make sure you have checked each of your investment orders – amount, leverage, etc. before placing one to be processed.