Online Trading: A Beginner's Guide

Online broker platforms have provided traders a better way to participate in the markets.

Before electronic trading services were introduced, traders needed to rely on brokers to buy and sell securities on their behalf. With the founding of the Internet and online brokerages, traders can now take care of such financial transactions on their own.

While it is a fact that you can make money by trading, you first need to familiarize yourself with the concepts, tools, and factors that influence a market's behavior.


  • Fundamentals of the Stock Market
  • Getting Started on Online Investing
  • How to Start Trading the Markets
  • Essential Tips for Beginner Traders

Getting Started on Online Investing

You first need to find a suitable online broker before you can make your first trade. Online brokers allow traders to open and close their positions via a digital platform. They also help with handling funds and investments in a trading account.

Online brokers differ in terms of products, services, accounts, and other facilities necessary for your trading.

In choosing a broker, here are a few things you need to consider:

Capital

Some online brokers have a minimum deposit requirement to open a live account. You also need to be aware of the minimum account balance that some brokers expect their clients to meet.

Pricing

It is crucial to find out how your online broker charges fees, as this can affect your trading frequency. If being invested in a single stock is enough for you, make sure to confirm whether your broker applies an inactivity fee. On the other hand, if you're frequently trading, a broker that charges less for every trade you make may be a better option for you.

Support

Determining how much support you'll need from your broker will depend on your experience level. Low-cost online brokers may not have enough support features such as market analyses or broker-backed trades. Find an online broker with reasonable fees and one that provides market researches and insights into trading and guidance from regulated brokers.

Instruments

Different online brokers are designed to cater to different types of traders. Therefore, you also need to check whether your broker allows trading in other instruments (currency pairs, commodities, futures, bonds, etc.) if you're looking to invest beyond stocks.

How to Start Trading the Markets

You can start buying and selling stocks once you have your trading account up and running. It is recommended to get stock quotes in real-time. This way, you know the current stock prices since the prices can immediately vary in a rapidly-changing environment.

You can perform two types of transactions when making a trade; a market order and a limit order. A market order executes your trade as quickly as possible at the stock's current market price, while a limit order will only carry out the trade at a pre-determined or better price.

You can also employ additional orders such as stop, stop-limit, and trailing stop orders, as long as your broker provides access to them.

Essential Tips for Beginner Traders

  • Start with a small capital
  • Allot enough time for research
  • Avoid buying high
  • Keep your emotions out of the equation
  • Be realistic with your profit target
Create Account