Online Stock Trading

Among the many revolutionary changes brought about by the advent of the Internet is online stock trading. Once the exclusive preserve of the rich and the wealthy, the stock market has now become a place where even the common man can play a part. Investors today can use Internet client-server technology to trade stocks anywhere, anytime they like. Just a couple of mouse clicks and the client is through with a thousand-dollar transaction!

There are several ways in which one can participate in online stock trading. One can use an online broker, or do it himself.

There are two types of online brokers: discount and full-service. The former are licensed individuals who have direct access to the share market. They neither give you advice nor research the best options. They just order the stocks you want at a discounted price. They earn no commission but make money by selling mass amounts of stock.

In comparison, a full-service broker offers many more stocks. They act as your personal agent in all share-related activities, such as advice in buying shares, creating a safe investment portfolio, and offering investment advice. Commissions being their main source of revenue, they work hard to satisfy you. So they do a lot of research on the best stocks and investments for you, and hope you will stay with them.

As stock trading is a complex thing, you should do your homework before taking the plunge online. Take into account how frequently you trade, what other services might interest you, how reliable the trading system is, whether it is difficult to log on when the market is active, and other variables. As hunch or intuition may turn out to be misleading, try to be conversant with the market’s state-of-the-art trading techniques and strategies. Try to read the quarterly or annual reports of the companies to know what they are doing with your money. When in doubt, ask your stockbroker.

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Online Stock Trading, Is It Here To Stay?

Trading stocks on the internet is a relatively new thing for most people but it won’t be for long. The only reason that it is new in the first place is that the internet is new relatively speaking. In 1999 a little under 3 million people traded over the internet, now online stock trading has ballooned with more than 10 times that number of people trading daily.

So why have people begun to do this? Why is it so popular? Well there are several reasons and some are good and some are not as sound when you think critically. The most popular reason cited for online stock trading is that they no longer have to forfeit some of their earnings to brokers in fees charged per trade. This doesn’t get them out of being charged fees per trade but it does cost a lot less to do it yourself with one of the dozens of day trading companies that there are available on the internet.

People are often trying to get away from brokers all together for more than just the fees they charged. Many people are fed up with brokers who did poorly in the recent downturn in the market. Their performances were sub par and people lost a lot of money so you can’t blame them. However the word of caution is to not lump all brokers into the overpaid and under skilled group. There are many brokers who are well worth their weight in gold because they know the market so well and have such good instincts—this shouldn’t be your only draw to online stock trading.

Other reasons people left their jobs to go into full time trading on the internet because they think that they can do better at it than at their real job and it will be more fun to boot. There is a certain romantic idea that people have about sitting in their beautiful home sipping gourmet coffee and checking in on their online stock trading portfolios a few times a day while making hundreds of thousands of dollars. This is a dangerous move for lots of people because they have no idea what they are getting into.

In order to be successful you have to have knowledge of the world’s economies and how that can be affected by the current events of the day. You also have to be good at evaluation of companies as far as potential for profit and so on. The third thing that you must have is nerves of steel and a loose grip on the money that you are trading with. Many day traders (or former thereof) will tell you of the “hits” they have taken totaling many thousands of dollars in a few hours for a wrong move.

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Of Stocks, Stockholders And Stock Market

A copper mining enterprise Stora Kopparberg first introduced the system of stock in the 13th century. The financial backers and owners felt the need to raise money for investment in the new projects of the same company so they started the method of stock and shares. It was also required in order to ward off the threat to the ownership rights if the company was sold, which would mean complete loss of control.

The investors got the monetary support they were looking for and at the same time solved ownership issues in case the company was sold by granting stocks to the people. Plus, they sold a part to people and still retained control over the company. Thus, the owner had some portion of the assets, some power to make decision conditionally. In return, they shared a part of the profit with the stockowner as dividend.

Financially, stock implies the ownership or share in a corporation. It gives the stockowner the right to claim a share in the assets and income of the corporation. The two types of stocks, preferred and common differ in many respects. The common stock owners can vote at the shareholders' meetings whereas the preferred stockowners cannot vote. Common stockowners get dividends declared by the company, whereas preferred stock owners have higher claim in assets and income of the company. Preferred stock entitles the owner to have his dividends earlier than the common stock owner. Preferred stock owner gets the priority when the company goes bankrupt. Besides these two, the other types of stock are dual class shares and treasury stock.

A stockowner is not liable to losses in case the company closes and has loans to pay back. The loss of the stockholders is limited to the money that would have been made by converting the assets into cash since all the money would be used to repay the loans to the creditors.

A stock exchange is the place where trading of shares is carried out. Individuals and companies sell and purchase shares on a large scale. Generally, a particular company trades only in one specific market and is said to be on the list of that particular stock exchange. However, big multinational companies can be listed on many stock exchanges. This is called inter-listed shares.

There are various methods to buy or sell finance stocks, but the commonest among them is through the mediator called stockbroker, who actually transfers the shares from one owner to another. Stocks can be bought directly from the company also.

The stock market of a country is an indicator of its economy, which just goes to show the growth and power of the stock market.

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Lack of a Trading Strategy

If you know the pitfalls of trad¬ing, you can easily avoid them. Small mistakes are inevitable, such as entering the wrong stock symbol or incorrectly setting a buy level. But these are forgivable, and, with luck, even profitable. What you have to avoid, however, are the mistakes due to bad judgment rather than simple errors. These are the “deadly” mistakes which ruin entire trading careers instead of just one or two trades. To avoid these pitfalls, you have to watch yourself closely and stay diligent.

Think of trading mistakes like driving a car on icy roads: if you know that driving on ice is dangerous, you can avoid traveling in a sleet storm. But if you don’t know about the dangers of ice, you might drive as if there were no threat, only realizing your mistake once you’re already off the road.

Although trading involves risk, never treat it like gambling. You must have a solid trading strategy, one which you plan, test, and revise repeatedly. You need to stick to this strategy, and never act on spur-of-the-moment decisions. All you do when you act on a gut feeling is jeopardize any and all of the thoughtful planning you’ve done by giving yourself completely over to chance. Remember that you can never control where a single trade will end up, but you do have control over a long-term plan.

And don’t evaluate your performance on the basis of individual trades. A gambler might think that a small loss is a failure while one huge risky gain means success. Traders should never think this way. Instead, judge yourself by the consistency and profitability of your overall strategy. This is the only way to stay in control of your trading success.

To do this, of course, you have to build a solid strategy. This means developing a set of pre-defined rules that you follow consistently. You should set goals for each week, or possibly each month (but never for a single day, as there are too many things you won’t be able to control over such a short period of time). Next, decide on realistic profits and losses for each trade. Then, according to these markers you’ve set for yourself, carry out your plan without exceptions.

If your set profit for a trade is, say, $300, sell when you reach that milestone, even if you have a feeling the stock will rise. Otherwise, you corrupt your plan with too much risk, and you’ll never know if your overall strategy was successful or not. You may have gotten lucky with one trade, but you haven’t determined any kind of consistency.

Keeping to a strategy will allow you to revise what you’re doing, learning which goals and limits will work and which won’t. Straying from your strategy teaches you nothing useful that you can apply over the course of your trading career. So, while you may gain a few hundred, or even thousands, of dollars on a single trade, who knows how much knowledge you sacrificed, knowledge could have gained you tens or even hundreds of thousands of dollars in the years to come.

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Online Trading And System Trading

Indeed, online trading has revolutionalised the way common folks like you and me trade
in the capital markets.

Online trading has its pros and cons. Online trading’s main pro is convenience and speed, giving a trader maximum control of all aspects of trading. Conversely, online trading’s main killer con is in the tons of human error that can happen due to a lack of guidance.

Due to a lack of guidance, most online traders find themselves extremely prone to their emotions when trading online. When they feel the urge to get out of a position simply because their emotions are all fired up, they can at the simple click of a mouse. This has led to a lot of failed trades and a lot of lost money.... The only way anyone can succeed in online trading in the long run is through a disciplined trading regime based on a fix trading system or what we called “System Trading”.

System trading means that you pick stocks based on a fixed criteria, enter on a fix criteria and exit on fixed criteria... all put together nicely like different parts of a car. With system trading and a fixed portfolio management policy can anyone truly attain success in online trading.

System trading aims to take the emotion out of the trader by having objective and specific criteria for every aspect of online trading. With a fixed set of criteria to follow when online trading, the trader have something to fall back on when emotions start to fly, and that is, the proven track record of the system that the online trader is following. The online trader is assured that as long as he follows the rules to the nigh, the odds of winning will always be stacked in his/her favor. Over the long run, with a sound portfolio management policy, anyone can succeed in online trading.

For the Best in System Trading, please visit http://www.mastersoequity.com/MOE_startradingsystem.htm

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Making 200% In The Stock Market Can Be Easy

There is an unfortunate belief among many people that doing well in the stock market (and other markets, for that matter) requires a great deal of work and loads of time. This is partly a function of those in the markets wanting to make what they do seem complicated, and therefore exclusive. The reality of the situation is that you do not need to dedicate your life to the markets to produce good results.

I will use myself as an example. In most years there are significant time periods during which my schedule of travel and other commitments prevents me being overly active in the markets. One particular year I added a six week trip between the end of May and the early part of July in to the mix as well. During the course of that year I did a total of about a dozen trades in the stock market. Want to know my return for that year? It was more than 200%.

Now you might be thinking that this is an anomaly. It’s not.

Over about an 18 month period between 2002 and 2003 I was able to double the value of my retirement account trading stocks (I had to double it to make up for the beating the mutual funds I had been in prior to that had taken) necessarily using a much more conservative approach than in the example above. Again, that was done on a relatively small number of trades.v
Actually, I don’t normally make that many trades in any given year. If I get very far above twenty it’s rather unusual.

Clearly, I’m not a day trader. I do not get in and out of positions rapidly. My strategy is one I have formed over the years which allows me to find stocks with good upside potential that I don’t have to constantly watch. The positions I put on are intended to be held for weeks, if not months. That’s the timeframe when the largest moves happen, so that’s the timeframe I want to trade.

The strategy I use incorporates all three primary forms of market analysis – fundamental, technical, and quantitative. That said, however, I can go through the stock selection process in a couple of hours, at most. If there isn’t anything worth really looking at, the whole thing can be done very quickly.

What’s more, if I have active positions on I will generally not be looking to enter any new ones. In that case, aside from a little bit of checking up to see how the stocks are trading and if there’s any important news, there’s very little to be done. I can literally trade my system in only a couple hours a month.

Now you might be saying that I’ve got a great system. Maybe I do. It certainly works for me given the constraints I operate under with my schedule. I don’t consider it any major secret, though. In fact, I outlined it in detail in my book, The Essentials of Trading, so you are free to take a look at it for yourself.

The important point here is that I was able to develop a trading style and methodology that works for me. Anyone can do that. It is a question of making an honest self –assessment and defining an approach that fits within the parameters you have for trading or investing in the markets. Maybe you can day trade, or maybe you’re like me with limited time to dedicate to finding good stocks to buy.

Whatever the case, you have to do what works for you and realize that you can trade effectively regardless of how much time you have to put in to it.

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A Disciplined and Organized Approach to Trading in the Stock Market

A Winning Approach to Trading in the Stock Market

Many traders lose simply out of ignorance. They base their trades on hunches, news, or tips from friends, and do not define specific risk and profit objectives before placing trades.
Others have the merit of educating themselves but fall victims of their emotions. They hold on to losing positions hoping they will turn into winners and sell winners by fear of losing a small gain. They overtrade to fulfill a need for action or by fear of missing out.


The consistent winners follow a winning approach:

• They have a strategy to enter and exit trades
• They use good money management
• They take consistent actions, they follow a trading plan
• They keep good records so they can review their actions
• They avoid overtrading
• They have a winning attitude

A strategy to enter and exit trades

You need to a strategy to put the odds in your favor for each trade you take. Your strategy should be as objective as possible and include the following elements:

• Entry: conditions required before you can enter a trade - may include technical analysis, fundamental analysis, or both.

• Initial stop loss: price at which you will close the entire position if it does not go in your favor. The risk per share is the difference between the entry price and the initial stop.

• Initial price objective: price at which you will take some or all profits if the trade goes in your favor.

• Trade management: set of rules that dictates your actions while a trade is opened. It may include trailing stops, closing position, etc…

For every action you take, the reason should be clearly described in your strategy.

Money management rules to keep losses small

The goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following:

• Maximum amount at risk for each trade. The different between your entry price and your initial stop loss is your risk per share. Your maximum amount at risk for each trade determines the share size.

• Maximum amount at risk for all your opened positions.

• Maximum daily and weekly amount lost before you stop trading – avoid trying to trade your way out of a hole after a loosing streaks.

During your learning phase, your goal should be to survive, not to make money. Start with low limits and raise them as you become a consistent winner otherwise you will simply go broke faster.
Good record keeping

Although the process of gaining experience cannot be rushed, it can be made much more efficient by keeping good records of your actions. Good records will allow you to:

• Review your actions at the end of each day to make sure you followed you strategy, not your emotions.

• Learn from your losses – they cost you money, make sure you get the education in return.

You should also keep a journal of your observations.
A trading plan to keep emotions out of your decisions

During trading hours, emotions will turn smart people into idiots. Therefore you have to avoid having to make decisions during those hours. This requires a detailed trading plan that includes your strategy and your money management rules.
For every action you take during trading hours, the reason should not be greed or fear. The reason should be because it is in the plan. With a good plan, your task becomes one of patience and discipline.
You have to follow the plan without exception. Any valid reason for an exception - for example, correcting an oversight - should become part of the plan.
Overtrading

Sometimes the best thing to do is to do nothing. Not trading on those bad days is key to becoming a consistent winner – in some situations it is very tempting to overtrade:

• If you trade to fulfill a need for action, to relieve boredom
• If you can’t find the proper setup but can’t wait
• If you fear you are missing out on a great trade or on a great market
• If you want to make up for losses (revenge)
• If you trade to feel like you are working instead of sitting around. Trading involves a lot of work other than the actual buying and selling.

You should not trade under the following conditions

• You are not following my trading plan
• You have reached your daily or weekly maximum loss
• You are sick or very tired
• You are very emotional (upset, pressured to make money, self-esteem destroyed)
• You are using new tools you are not completely familiar with
• You need time to work on your trading plan

A winning attitude

Losing traders look for a “sure thing”, hang on hope, and avoid accepting small losses. Their trading is based on emotions. You must treat trading as a probability game in which you don’t need to know what is going to happen next in order to make money. All you need to know is that the odds are in your favor before you put a trade.

If you believe in your edge, which is you believe that the odds in your favor for each trade you enter, then you should have no expectation other than something will happen.

Your attitude will have a direct influence on your trading results:

• Take responsibility for all your actions – don’t blame the market or world events.

• Trade to trade well and for the love of trading, not to trade often and not for the money. The money will come as a result of trading well.

• Don’t be influenced by the opinions of others. Reach your own decisions and follow them.

• Never think that taking money from the market is easy and never assume that you know enough.

• Have no particular expectation when you place a trade because you know that anything can happen.

• Don’t try to guess the future – trading is a game of probabilities.
  

• Use your head and stay calm – don’t get excited or depressed.

• Handle trading as a serious intellectual pursuit.
  

• Don’t count how much money you have made or lost while you are in a trade - focus on trading well.
Trading Framework was designed to help you build those crucial elements into your trading. www.tradingframework.com

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Do Any Companies Offer Free Online Stock Trading?

While some companies offer what they claim is "free online stock trading," no company can ever realistically offer a product for free, unless they are a non-profit organization with a stated goal to help bad stock traders learn how to trade better. And because no such organizations exist, you will have to trade with a company that charges you fees, whether it is explicitly or implicitly.

Companies that offer "free online stock trading" are generally offering free access to a members-only online stock trading site, which will allow you to use a range of stock trading analysis tools; it will also usually give you access to dozens of free stock tips from different sources, often including relevant newspaper clippings about publicly-owned companies.

If you opt for a "free online stock trading" company that gives you a free membership, that site will likely generate revenue by selling ad space or by charging commissions on trades. This means that your stock trading experience may be significantly inhibited by pop-ups, flashy ads, and biased information; or it may mean that you will have to pay excessive fees every time you make a trade.

On the other hand, some "free online stock trading" companies charge membership fees, but do not charge for trades. If you plan to make a lot of small stock trades each month, then you should consider opting for one of these companies, which will charge you each month, but wont require you to pay fees when you trade. However, on the other hand, if you plan to make few large trades, then you should consider selecting one of the online stock trading companies that will charge you per trade, rather than per month.

Keep in mind that there is no best solution to this problem for every person. The best solution for one trader may be completely different for you. This is why is it is crucial to inspect each deal in terms of what it will offer you personally as a trader.

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Full Service versus Discount Stock Brokers

Investing in the stock market has become more popular than ever. And especially since brokerage services now offer Internet transactions that can be placed from home, work, or from the local cyber café; individuals have begun investing for themselves without the help of a full-service broker. But many find that they either don't have the time to properly research their stock picks, or they lack the expertise needed to successfully trade the market. For those who want professional help, there are both full and discount service brokers.

The traditional full service stockbroker does more than simply buy and sell stocks for clients. A qualified full service broker will also act as a financial advisor, to help clients choose stocks that are appropriate for their particular needs and investment goals. For example, a full service broker may recommend steady, dependable stocks that pay a quarterly dividend to someone who is on a fixed retirement income. To a younger person trying to grow savings into a nest egg, a broker might take a more aggressive approach, and recommend stocks that carry more risk but also have more upside potential, like small companies in new and revolutionary technical industries. The full service broker will evaluate a person’s entire financial situation, and then help pick stocks to enhance one’s portfolio. Each time a stock is bought or sold, the broker also handles every detail of the actual transaction, by calling in the order and following up to ensure that it was properly executed. A full service broker is in charge of the day-to-day technical details of buying and selling, but is also a professional who gives stock market advice and educates customers about stock market strategies.

The discount broker, on the other hand, may be equally qualified, but does not dispense any advice to customers. Even if the discount broker can see that a client could use some guidance and personal advice, he or she will refrain from playing that role and will only follow the client’s orders to buy or sell specific stocks. In other words, these brokers will assist in doing the technical tasks involved in participating in the major stock exchanges – something that ordinary consumers can’t do because it requires training, licensing, and certification. But if you are confident that you can make your own stock market decisions without anyone’s oversight, a discount broker can execute your trades. Because they are not responsible for picking successful stocks for you, they don’t charge as much money. A full service broker charges for doing research and giving professional advice, in addition to other brokerage duties. But a discount broker only charges for basic buying and selling services.

Discount brokers charge a fraction of what full service brokers charge, and they are a good and economical choice for those who prefer to do their own research and analysis of the stock market. But you don’t have to limit yourself to one or the other. Many investors use both types of brokers. They may have part of their portfolio of investments under the care of a full service broker, and then trade other stocks on their own, through a discount broker.

Choose one – or one of each – for your own stock market transactions, and see which works best for you once all the fees are paid and you have a chance to evaluate the wisdom the stock picks made by your broker and by yourself.

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Day Trading Forum Basics

If you are interested to be at a day trading firm, you can jump into a day trading forum and have it as your training ground. Day trading can be a very confusing field and will require you to have a lot of knowledge. If you have a little knowledge about day trading, your knowledge might not be very fitting compared to the knowledge of the experts.

If you want to learn them, you need to learn and research about the important facts and strategies that cannot be learned from books but from personal experiences. Your guide in learning day trading firm is the day trading forum. It is where you can place and state all your queries.

You can ask anything you want to know in the day trading forum that you can find online. the day trading forum will be beneficial to you because even if you do not have the prior skills, you can become a member and ask anything that you want without hesitation. Besides, you don’t get to talk to a certain member personally so it is acceptable if you ask even the simplest thing about day trading.

Your message will be read by many people and you can have the chance to get heard easily. When the day trading forum members read your message, they will contribute anything they have in mind. Their answers and comments will be helpful to you as you are learning the process. You will also notice that the members have already a professional language that you might not understand.

If some things are still not clear to you, you can ask all over again. You can ask multiple questions for as long as you want and don’t worry because you will not get banned or deleted from the database. The more questions you make, the livelier the discussion gets. You can feel free to use the day trading forum to ask questions provided that the questions that you are going to ask have relevance to the subject.

You can also express your opinion and interact with their opinions. If you have relevant information that you want to share, there are no restrictions. The day trading forum visits the sites regularly so it is important to remember that you should keep relevant discussions in the topic.

The capability to act together with the other professional day traders in a day trading firm is important especially for beginners. In a day trading forum, a beginner can absorb the strategies and tips that a professional gives. This will help them to be acquainted with it easily so that they can decide the best day trading firm that they want to choose. Choosing a day trading firm may be a very risky task. A day trading forum will help you to come up with strong decisions that are acceptable.

To learn more about the day trading forum or discussion, all you have to do is to register so that you can be a member. You just have to simply fill out a form and after a few minutes, you are ready to make your own post with your own opinion. Always remember that interacting with the best day traders is the solution to be like them and talk like them.

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