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Investing Stocks Online 1

Investing stocks online by private individuals is gaining popular momentum. Stock investment is about buying and selling shares in public companies with a view to building your share equity, gaining profits from selling and deriving income from company dividends. Public companies which sell shares are raising money to grow and maintain their businesses. In the past, you had to phone, fax or meet up with your stock broker to instruct them to trade share on your behalf. Now shares on the NASDAQ, NYSE and Amex as well as many regional and international stocks can be trade online efficiently and at comparatively low costs to you.

As a guide to online investing, there are five components to consider when you decide to start your own online stock market investing.

1. Which Broker?

Yes, you still need to use a registered broker to buy and sell shares for you. Instead of a name and voice, your broker is now an electronic page which requires you to sign in after you've registered as a client. Finding an e-broker is not easy these days with hundreds of choices online. Decide on the online broker by five elements:

  • i) Fee structure. Online brokers work either on flat fees per transaction or a percentage of value of stocks traded (or a combination of both). There are online brokers that specialize in certain industries of stocks as well as on frequency and volume of trade - so match their fee structures to your investment style to make sure that it's cost effective
  • ii) Registered and reputable. All licensed online brokers should be registered with the local or national securities authority. Research their reputation and record by reading online editorials, blogs and forums that specialize in online stock market investing.
  • iii) Easy of trade. How easy is the online broker's trading platform? Don't just take other people's word as gold but try out some broker's trading platforms. Many online brokers have free trials when you can do a virtual reality run through of investment over time and see real time results without having to invest real money. This is a great way for a practice round of investing stocks online.

2. Research and Information

Besides researching about your online broker, you should begin to familiarize yourself with research tools and information sites that act as guide to online investing. Trustworthy news sites are a good start, as well as recommended blogs and forums. Your chosen online broker will also have online access to real time company data and economic news which is vital for online stock market investing.

3. Stock Investment Software

Stock market investment software is a handy tool for the online investor. Enter up-to-date data and you can generate predictions and cash-flow analysis which will help plot your investment strategy - whether to hold on to or get rid of stocks. There are many free trial software that can be tried for effectiveness and ease of operation - so take advantage of them! Your chosen online broker should also have software tools and recommendations that you can use to guide your online investing.

4. Fund your Investing

The tools and the online account are in place - how to fund the investment? Depending on your asset base, you can often borrow money in a margin account to invest in shares (this is risky though!). Invest online only what you can afford. Many online investors take on the psychology that because it's online (no paper!) that losses somehow may be also be virtual. Use online investing tools to budget your cash-flow depending on your investment strategy.

5. What if Online goes Offline?

Online stock market investing does mean you should shut out all the older communication technologies. Yes, an online trade order is very simple to place but what if you can't get online or the internet is down and you really need to order or cancel an order? Be prepared with backup options to contact your broker. Good online brokers should have off line customer service points including phone, fax, mail and even retail contact points for you to issue trading orders.

So what are you waiting for? Jump online, start your research and due diligence. Before long, you will be investing on the stock market online. The best thing about online investment is that you can be anywhere - at home, at work, on holidays. So long as you have access to an internet connection, you can place that order to buy, buy, buy or sell, sell, sell.