Home Business Insights & Advice Trading 101: A beginner’s guide to trading stocks online

Trading 101: A beginner’s guide to trading stocks online

by John Saunders
6th Dec 20 10:09 am

The world of trading stocks online can seem like a daunting one at first glance given all of the acronyms, charts, and figures that are often banded around. However, that does not mean that it is something that you cannot get into, even if you have no prior knowledge or experience of the financial markets.

To help you become a trader we have made a list of the nine different activities that you must partake in on your journey.

1. Choose a broker

There are numerous well respected online brokerage companies out there that can help you to not only place trades for you, but also help you to learn more about the process of becoming a successful stock trader in general.

2. Research stocks for trading

Once you have the ability to be able to buy stocks, you then need to do some research on which ones to purchase based on the type of portfolio that you want to build and the level of risk that you are willing to take.

3. Decide on a trade

Based on your personal research, you will have now decided what type of trade you first want to place, as there are many different ones to choose from. However, the two most popular types of trades are limit order and market orders.

4. Know the costs

One of the main costs that you will incur as an online stock trader is commission. This is something that you need to think about when deciding on a broker to use as the rates charged differ from company to company.

5. Understand taxes

Just as important as understanding the costs, is understanding the various tax rules associated with the different positions that you can take on a stock. The taxes that you pay out on profits made from trading stocks are called capital gains taxes.

6. Trade a stock

After you have placed funds into your brokerage account and they have cleared, you are then in a position to be able to place your first trade. This should only be done once you have completed each of the above steps.

7. Learn trading strategies

For those individuals who are completely new to the world of financial markets etc, they should stick to the more basic, and easy to perform, buy and sell trading strategies. Once mastered, you can then go on to learn some more advanced techniques. The guys at The Robust Trader can help you with this.

8. Know the alternatives

Trading stocks online is just one of several different ways in which you can interact with the financial markets. There are also the likes of exchange traded fund (ETF) trading and mutual fund trading that are great ways of trading online.

As is the same with learning any new skill, being comfortable with trading stocks online and then making money from the trades takes time. However, if it is something that you persist with and dedicate your time to, then the rewards can be very big – it just requires some dedication from yourself.

 

The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.

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