5 Things you need to know as online investor
Posted on 2nd Aug 2015
by TopShareBrokers.com team
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5 Things every online investor should know, if you think you are ready to begin investing online, follow these 5 rules to help succeed:
1. Start Small & Stay Diversified:
Its always good to start with slow and escalate when you get some confidence. If you are new to online investing, don't invest big amount into an online account. Start with a smaller sum, which will be easier to handle and keep track of. Once you feel confident, you can then decide to add more money to your online account.
Many Investors tend to concentrate on large cap Stocks, They should make up part of your portfolio, but should not be ALL of it. Investors should have to plan well-balanced portfolio of stocks, bonds, ETF, Mutual Funds, IPO and cash.
2. Judge the final cost:
As Online Share Brokers trading costs are lower than full-service brokers, but they can still add up, if you do a lot of buying and selling. Consider/study other transaction charges and tax also in your profit margin. One should give careful thought to what the tax & other charges would be as a result of large trading.
3. Choose correct type of make orders:
With Online share brokers, you need to trade your order by yourself, in such case you need to learn how to use available tools effectively and utilize maximum available feature of the tools. Here are three "orders" that you should use to your advantage:
- MARKET order is an instruction to buy or sell a specified amount of a stock (or other security) at the current market price. You are buying and selling stocks on Market prices if buyer or sellers are available. The advantage of a market order is guaranteed expectation of order.
- LIMIT order is an instruction which allow us to define a limit to Buy or Sell a stock.it allows a share to be buy or sell on specific price. Buy limit order can be executed only on lower price, and a sell limit order can be executed only on high price. Limit order are not guaranteed.
- STOP-LOSS order sets a sell price for a broker. When the price of the share drops below this level, it automatically does the transactions.
Also: Take the time to learn about "stop orders," "day orders" and "good-till-cancelled" orders.
4. Problems are inevitable:
As we are moving more towards online brokers, trading online is not foolproof. It's possible that some time you can't access your account or you could be away from your computer when market have major move. Few examples of issues are you don't have access of internet, Technical problem with the software or a natural calamity. In such cases it's a good practice to know alternative trading options about your brokers like call n trade service and so on.
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5. Information is power:
As online investors, you are going to invest your money in individual shares online, its your duty to keep your self-updated about the company's portfolio. Don't just settle for the hype about the hot shares. Always do your own research before investing and don't trust too much on the tips given on news channels. Take advantage of free services that allow you to get automatic message whenever there is news about your shares.
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