Investing online in the stock market could be a great way to make your money make more money. This is even more true during those days when savings accounts and long term bank notes do not offer some great returns. It is important to say that trading online is not a risk-free activity and you can lose your capital. Having said that by doing substantial research and using a very good broker and trading platform this could be a very profitable activity in the short and medium term.
TopTradingPlatforms.co.uk experts have helped us to flash out a plan for success:
Research current trends
First thing you want to know is getting the information. In the digital era, you will find a huge amount of free reputable sources that will keep you updated on the latest market trends. You can also subscribe to a stock-trading magazine such as Kiplinger, The Economist or Bloomberg to get even better news.
Select a trading website
It is very important to pick the right online broker. This is why websites such as TopTradingPlatforms.co.uk can be very useful in identifying quickly the online broker that it is best adapt to your trading style. Ultimately you want a broker that is fully reputable and that do not charge you too much. It is also important that you do familiarise with the trading platforms they are using and test them with some demos.
Create an account with one or more trading websites
Normally every trader has the preferred online broker however once you have narrowed the list to the last two you might need to open few accounts to see which one you like best. It is also important to check the balance requirement for each broker to see if it does suit your budget. This is because some trading platforms do not accept traders with small capitals.
Practice trading before you put real money into it
Most trading sites will allow you to practice before trading with real money. Don’t rush things. It is important that you feel completely comfortable with the platform before risking your money. After all the gain is in the longer term and by burning your budget you will put success as a threat. By trading in practice mode you will be able to try out some strategies without having the stress of risking your own money.
Choose reliable stocks
Surely there are many different options to consider however if you are going to invest in stock than you want to buy those from companies that are dominating that niche. You need brands that have a very good business model and that people consistently want. It is important that you will check company’s public financial reports to see how they are doing: remember a profitable company normally has a more profitable stock. Another thing to check is to see what was the company’s worst quarter on record and see if the risk of this repeating again in the next quarter is real. It is also helpful to take a look at the company’s leadership and operating costs and of course any debts. From their balance sheet you should get a good idea if the company is going to be profitable in the future or not. Also look at their competitors: are some of them doing particularly well in the latest period that could undermine the opportunity for the companies you are considering to invest on?
When you are ready you can finally take the plunge and start investing. It is important that you start trading small and also only use the money that you are prepared to lose. It is reasonable to start investing with as little as $1,000 as this will also be a good sense check of the transaction costs you will incur and so on.
Monitor the markets daily
It is important for you to check the markets daily. The golden rule of trading is that you should buy low and sell high. If the value of the financial asset has increased significantly since you started to trade than it is a good time to consider whether you should sell and reinvest in other assets.
So if a financial asset is at a relatively low price compared with the history and you believe it will improve, than you should buy. Of course nobody knows exactly what is going to happen with the price of that asset but this is the challenge of trading. With the right information about the financial asset tough you should be making some very educated guesses on what will happen to the price of the asset.
When you believe your financial asset has touched the peak than it is time to sell it. The bigger is the difference from when you have firstly bought the asset the bigger will be your margin.
Do not to sell in a panic
It might happen that the price of a financial asset that you have invested in, start to drop lower than the price you have bought it. In this case you instinct might suggest you to get rid of it. Surely there is the possibility that it will keep falling and never recover but there is also the possibility that it will rebound. Selling for a loss just because you panicking it is not the best way to go about it as you will be lock in your loss regardless of what will happen after.
This should give you a great general idea on how to approach the markets, but when unsure, always consult a professional. Swagger does not assume responsibility for any suggestions provided within this article.