Before the internet was available to almost everyone, potential investors needed to visit and work with a traditional brick and mortar, storefront brokerage firm, which often charged their customers hefty fees for the privilege of watching and managing their money, design an investment strategy and helping them grow and sustain their wealth. In the last decade or so, on-line investment services, like E-Trade, TD AmeriTrade, and even traditional banks, have made do it yourself investing easier and more cost effective than ever.
Before opening an online investment account, research the price, the level of customer service and client care offered, and how quickly your trades can be excited. When you want to trade stocks on-line, you may need to access your account during non-business hours, so also see if your preferred platform supports an app for your mobile smart phone or tablet. Decide on the level of client care you need. If you are a seasoned and savvy investor, the firms online research resources may be enough to help you make informed decisions. In this case, a very bare bones service is needed. If you are just beginning to invest online, you may feel like you need more hand holding and advice. Look for a firm that offers instant chat or email with their brokers to help you reach your goals.
Another factor to consider is the fee structure of the online firm. Many sites require a minimum balance, an annual or quarterly maintenance fee, and a fee per trade. Some sites require a certain number of trades per month or quarter and your account may be penalized for not meeting this quota. Try to get a handle on your activity level before you open an account, so you are getting the most for your money.
Once you have opened your account, you are ready to trade stocks on line. When you are ready to make a trade, be sure you get a real time market quote. Many online aggregate sites offer a delayed quote, as much as 20 minutes, and that can make a big difference in trading activity. Now, you need to decide between placing a market order or a limit order. A market order trades at the current market price of the stock. A limit order only trades at or better than a price you specify. If the stock doesn’t hit that price, the trade won’t go through.
You should also set up some loss orders, to protect you and your account from large scale losses. When you trade stocks online, you may not have the time to watch the stock closely, so stop orders, stop limit orders, and trailing stop orders, can all be used to stop the bleeding if your stock takes a tumble. Another important thing to note; although you can make online trade orders any time, your trade will only be excited during normal trading hours, and it may take several hours to match up buyers and sellers. When you trade stocks online, you can often cut out the middle man and keep more of your money in your pocket (or account).