Online stock market trading software is a delight for investors who prefer to do trading at the comfort of their homes. Online trading was introduced in early 90’s. Before that, investors had to visit stock exchange or [registered] broker’s office. This was a hassle and it would cost investors lot of time. Back then, investors had to pay big commissions to brokers for any transaction they would make.
All of this has changed now. Anybody can get an online trading account given that he or she is willing to invest some capital. Some companies have a minimum deposit requirement. The minimum deposit is between $ 100 to $ 2000, depending on which company you choose.
Some stock markets charge fee on every transaction that is made where some charge fee on every share that is purchased. For example, an investor who bought 100 shares of Google will pay $ 10 [if the charged fee is on per transaction and its $ 10 per transaction]. The same investor will pay $ 10 fee is he buys 1000 shares instead of 100. Now if the same buyer is using a stock market where fee is charged on per share bases [and if the fee is $ 0.02 per share] then to buy 100 shares he will have to pay $ 2 and for 1000 shares, $ 20.
Fee charged per transaction or per share varies a lot. In some countries the fee is kept low in order to encourage investors to invest money in equities. In USA fee is charged on per transaction and is below $ 10.
To make profit in this business one has to do research, a lot of it. Do not invest money in any stocks unless you are confident about the future of this stock. Avoid risky trades and only invest in safe companies. Profit in this business is possible but is not easy by any means.
Day-To-Day trading can yield profits but can be risky. Lot of research is required to successfully gain profits from daily trades. One has to gain knowledge about all the factors that can influence the market. This is no easy task.
Observe some big brand’s stocks on day to day basis. Try to understand the factors which make these stocks go up or down. Remember that it is always better to invest in good stocks.
Stock market trading is a good investment opportunity however it is also one of the riskiest businesses of all. There is always the possibility of losing your money. It is hard to make all the right decisions. Bad decisions can cost one lot of money.
A new investor might have the following plan: “You know what, I just need to get an online trading account then I will buy some shares and will wait till the share price go up. When it does, I am going to make lot of profit. Wait a minute, why not do it every day? I will buy shares of a company and will wait for few minutes may be an hour and then when its price goes up I will sell them to make profit.”
There are so many things that are wrong in the above plan. Some stock prices vary a lot each day where some vary only a bit. If a stock price has been increasing every day for the last one week, it doesn’t mean that its price will continue to increase. Continuous increase in a share price can be due to some positive development in a sector or some positive news has come out which is related to this company or the whole market is booming. There are tons of reasons why share price of a company will increase continuously for some time period.
Share price can start to decline anytime. No one can predict when this will happen. Trading shares online is a serious business and is not a video game where one can get second chances.
My advice to novices is to play safe. Do not invest money in any stocks if you haven’t done extensive research about the company’s past. Latest news about this company and the overall financial situation of a particular sector can help you predict the future of this company.