Anyone can make lots of money on the stock exchange through online trading and if they follow good online trading tips. But getting it right is an on-going process and even seasoned traders and investors still make mistakes. All traders should be prepared because anything can happen. Some of these online stock trading tips might work for some people and don’t work for you. It is advisable to also do an intensive reading.
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Below are simple online trading tips that one should consider when buying stock online:
Choosing when to trade
As an online trader, you must remember that you can make lots of cash quickly and lose it very quickly if you make mistakes. Firstly, decide if you want to become a day trader or not. A day trader is someone who buys stock in the morning and sells it by the end of the day. Secondly, a speculator trader or investor buys and keeps the stocks from two days to six months. Lastly, a long-term trader is someone who keeps the shares or stock for more than three years.
As an investor you need to be patient and know that you won’t become rich in just one day. Don’t overtrade and don’t react to the market ‘noise’. Share-price fluctuates; don’t get to emotional because you will end up buying and selling stock too quickly. You will lose a lot of money.
Invest in several stocks
There is a saying that says “don’t put all your eggs into one basket”, this is very important. Do not invest all your money with one online trading company or a broker. Invest in several stocks and in different companies.
Quality over quantity
Only purchase quality shares. Don’t buy shares for the sake of buying. Make sure that the company has been around for years and they are legit. Get your hands on the ‘Profile’s Stock Exchange Handbook’, the book is published four times a year.
Buy shares and stock after doing homework
Only buy stock after conducting your research. Do some background checks about each share. Look at the Price-earnings ratio. Some professional traders say they buy stock when the price-earnings ratio is between 10 and 20. Below 5 means it is too risky, so is above 30.
Carefully watch the price movement of shares
It is always important to watch the price movement of shares very carefully. As one of online trading tips, it’s important. Develop a spreadsheet where you record daily rate.
Monitor global trends
You can keep an eye on global trends such as the Chicago Board Options Exchange Market Volatility Index.
Start small before investing big
You need to start online trading with small amounts before you increase your investments. Investing big money comes with confidence. As for beginners, take your time and learn about advantages and disadvantages of investing too much money and too quickly.
Get a mentor
As a beginner, you need to get a mentor who will help you understand stock trading better, but don’t rely on him or her for everything. Also, you must have a basic knowledge about online trading before you could approach someone to help you. Bear in mind that nothing comes for free, you will need to pay the mentor for coaching you.
Choose your trading style carefully
Conduct a research on different types of trading styles and choose which one works best for you. First, you need to know what kind of stock trading online you want to do. As mentioned above, we have “a day trader, a speculator and a long-term investor. ”
Your trading style should match your lifestyle
If you choose to become a day trader, it means you will be required to be on your computer during the day. Choosing a day trader while you have a nine to six job won’t work for you. Make sure whatever the style you choose, matches your lifestyle.
Choose a broker that matches your trading style
If you choose a day trading, know that the fees are very expensive. Therefore, it is advisable to also choose a broker that has reasonable fees.
Associate yourself with successful traders
Identify who are the best online stock traders out there. Become friends with them so that they will teach you more information about trading. They will give you more online trading tips.