Beginning Guides for an Online Traders

All those advertisements and spambots always start out the same: “Learn how to earn $4,000 a month by just sitting at home!” Online trading academies have sprouted all over, from online to in-person. Before investing in an expensive trading course, do some research about online trading of stocks, currencies, commodities and metals. If you are really serious in online investment or interested in online trading, research will become a daily mainstay. Here are a few tips for novices dipping their feet into the trading-training pool. 1. Pick the right brokerage Not all brokerage firms are created equally. Each brokerage firm, from the one with the lowest or no minimum deposit to the ones that offer a touch of personal attention, strikes a balance between cheap trades and full service luxuries. Decide what is best for you: if you prioritize low commission fees to premium consulting, a cheap broker is the best option to suit your needs. When signing on with a brokerage firm, check the fine print. A large proportion of the true cost remains hidden in transfer, minimum balance, and inactivity fees. 2. Research, research, research While you may not have a direct line to Wall Street, the interconnectedness of today’s tech-fueled society has really minimized the gaps in investor knowledge. After learning to read your basic stock quote and ticker, you can start broadening your horizons to more advanced trading research. Keeping tabs on markets and companies you are particularly interested in is crucial to a sound trading strategy. 3. It’s not as simple as “buy” and “sell” Although “buy” and “sell” are the two words that are most clearly heard apart from the constant buzz on floor of the New York Stock Exchange, placing trades are not always so simple. There are a variety of orders that you can put in for your broker to make. If you simply buy and sell, you may lose some money to slippage, as there is a natural delay in the order being requested and actually filed. To protect yourself against slippage losses, consider putting in more precise orders that specify a selling point at a pre-instructed price point. 4. Diversify your trading So you want trade in the biggest market in the world? The foreign exchange market is the place to be if you want to start some currency trading endeavors. The foreign exchange, or commonly known as forex, is a massive market that spans multiple financial centers (New York, Hong Kong, London, Paris, etc.) which are buying and selling currencies. As in online trading, for currency trading you have to pick a broker as well. Picking the right market maker entails a bit more work than finding your first garden variety brokerage firm so currency trading may be a game to get into once you are already comfortable online trading and looking to get elbows deep in currency trading literature. Earth, wind, and fire The elements are not quite available on the market yet, but another trio of raw power is being traded today on the market: metals, energy, and agricultural products. Commodities or basic raw materials come in two different categorizations: soft and hard. Soft refers to harvested products while hard is in reference to mined goods such as gold or silver. The commodities market however is not quite as simple as the products it offers for trade. There are many complex instruments and financial devices that the commodities market like derivatives trading, forward contracts, and future contracts. When starting out in commodities trading, focus on learning about one market first and grasping the concept and technicality of the financial tools at your use such as future markets before diversifying. The markets can be intimidating and daunting at first glance. But with a diligent work ethic and the right guidance, they are a dynamic yet comprehensible place for your investment options. Angie Picardo is a professional writer that wrote for the personal finance website NerdWallet,where you can find advice on a range of finance topics like best online broker.