Share trading was once the sole domain of stockbrokers. It was only them who performed trades on their client’s behalf. Fortunately, online platforms are now easily available to investors. Using the internet and technology, investors may now track movements of tradable assets or securities in real-time. Online trading also provides a wealth of information which may be used to make more informed decisions for profitable trading.
Choosing an Online Trading Account
To begin trading online, an investor needs to register for a trading account and a Demat account which is required to be linked to his bank account for online money transfer. Know more about how to open a Demat account and a trading account.
Before you open both the accounts, it is essential to check the credibility and the credentials of the broking firm. Moreover, the trading account should allow you to make online investments in mutual funds, equity shares and IPOs, and lastly Futures and Options. Lastly, it should have secure interface and protocols such that all your transactions carried are safe and secure all the time.
It is important that you know trading terms like buy, sell, IPO, portfolio, quotes, spread, volume, yield, index, sector, volatility etc. before you place your first order in the stock market. Read financial websites or join investment courses to gain better understanding of the stock market jargon and related news.
Practice with an Online Stock Simulator
Using an online stock simulator is a good idea to practice your skills at zero risk. By playing Virtual stock market games, you could increase your knowledge on investing strategies. Most of the online virtual stock market games are synchronized with market indices and stock values, thus giving you a real experience of trading in stocks using virtual money. This helps in understanding the working of the stock market, without having to lose on stocks.
Chose the Low-Risk High-Reward Trading Method
There are always ups and downs in the stock market. Beginners often do more damage to their share trading account by expecting higher returns with high risks. As risk is unavoidable in online share trading, low-risk high-reward trading methods ensure that rewards are gained while risks are controlled.
Make a Plan
As the old adage goes, fail to plan and you plan to fail. Those who are serious about being successful, including traders, need to have an investment or trading strategy in place. It is of utmost importance to make right investment decisions through your trading strategies. Decide the amount you want to invest and the time limit till for which you want to hold the investments. Accordingly, you can schedule your orders to buy and sell, depending on the cash limits and exposure set by you, as per the planned strategy.
Keep Excellent Records
Make records of targets, entry and exit of trade, market opening and closing value; and record the lessons learnt during a particular trading day. Recording helps avoid unnecessary mistakes made in the past and improve current trading strategy. By keeping a track of trades, it becomes easy to plan the next move, thus enabling you to make a profitable trade.
Make Long-term Investments
Remember that investments need time to bear fruit and the risk of investment reduces over a period of time.
Diversify Your Stockholding
Diversification reduces risk by allocating investments among various financial instruments. It also reduces the volatility of an asset’s price movements.
All in all, an online trading account offers total control and flexibility into the hands of the investor.