So I want to start trading stocks online, allthough I only have a few hundred dallors in my savings…
I want advice from people experienced in trading stocks online. how should I go about getting started?
What website should I use?
What information will this website require?
Social, phone number, etc?
Do I need a certain type of bank account?
What should I try to do to profit, hopefully at a consistant rate?
I don’t expect large amounts of money or anything like that considering I don’t have much money to invest but hopefully a nice taste of what it feels like to make even a small profit.
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One Comment on “How should I start trading stocks online?”
Grimes 10th March 2010
I started trading with pretty limited funds as well but have done pretty well for myself. I started years ago in university when a friend of ours parents owned a small investment firm so we had a little student investor group that gave me a good start. I now self manage my own registered account as well as my wife’s work funds allocation.
I am in Canada and I use Questrade – since I trade in relatively small blocks my commissions are low – generally $5 per trade so make sure you find a good discount broker with low fees per trade. You won’t need the extensive tools you would get with a more expensive broker
If you want to open a strictly cash account (highly recommended to start) you will have to supply your personal info and agree to the different disclaimers. Read through them, but most are pretty standard and inform you of things like trading involves substantial risk of loss and different stock exchange policies. Then basically deposit the money (find a broker with a low minimum and no inactivity fees) and you will be ready to go. They will also ask you if you want to trade forex and what type of options you want to trade.
if you want to trade on margin, you will need to undergo a credit check and will need to continuously maintain enough cash and or capital in your account to stay current. Be sure you completely understand how margin works before considering utilizing it.
Some basic advise – read up on fundamentals and technicals because both are crucial to success (trust me I’ve learned this painful lesson many times).
Watch the overall economy and NEVER bet against the big guys. Institutional investors have the power to absolutely piledrive stocks into the ground. The sectors in favor at any given time are extremely important to monitor and if the big guys start dumping a stock or rotating out of a sector, be sure you’re moving with them.
Be very careful with how you buy your stocks. I have never bought a stock with a market order, especially in the environment we are in now. Pick a price you feel comfortable paying and buy with limit orders. Remember, these can basically float out for a month so you can sort of go fishing and hope you hit a low price without having to continuously watch the market all day long. This can save you a lot of pain, especially when markets can open 3 or 4 percent higher or lower any given day.
Most important – BE PREPARED TO GET OUT OF LOSING POSITIONS! I have fell in love with companies I was convinced everyone was wrong about and stayed convinced all the way to zero. Learn a little about technical analysis and you will have a huge advantage in determining stop loss points. You will make wrong choices, but your success will rest on being ready to get out and accept the losses. This fortunately gets much less painful over time and will eventually become second nature.
Also remember to keep yourself fairly diversified and don’t bet the farm on one stock or one sector. IE – had you bet solely on energy last summer, it would have been one painful ride to the bottom. ETF’s are a great way to mitigate risk and gain broad exposure to indices, sectors, commodities etc..
This is a little intense but I know its not easy to start. I learnt these lessons the hard way and am happy to try and help people avoid the painful experiences that will drive them out of the market forever.
Best of luck – read up and don’t go for the big score. Experiment, learn what works and what styles of investing suit you.
Most important – have fun with it! Investing can be an extremely interesting and rewarding hobby.