Today, thanks to the internet, online trading in the stockmarket is open to pretty much anyone with the cash to invest and access to the internet.
With this new found ability for even the average person to get involved in the stock market comes both pros and cons.
In this article I will go over a few of the pros and cons as well as some ideas of what you can do to make sure you are protected from making costly financial mistakes when you get involved with online trading in the stockmarket.
PROS:
1. Easy access 24/7. Even though the stock market isn’t trading around the clock, you will have access to many of the tools and resources of an online trading platform. This means that you can do research or continue to learn how the various interface works whenever it is convenient for you.
2. The ability to make trades for a very small commission. Many places will advertise trades for as low as a few dollars. This can help out the small investor who is just getting started.
CONS:
1. There are various trading platforms offered by the online brokerage houses, some of them are more complex than others. Even though they claim to be easy to use some people may still have trouble figuring it all out. It really depends on the individual and how comfortable they are with learning in general and technology in particular.
2. It may sound silly but it can be easy to forget that you are dealing with real money. In cyber land it’s easy to start thinking of everything as only «digital». If you lose sight of the fact that you are dealing with real money you may just end up taking gambles you wouldn’t normally take.
3. Depending on the firm you choose, you may have limited access to a professional. While I always advocate learning all you can about investing and being a partner with your broker, there will be times when you have questions. If you don’t have anyone to turn to for the answers you need you may end up making a bad decision.
None of these things are insurmountable obstacles and they can be easily overcome if you are willing to invest the time. Here are a few things you can do to turn these cons around:
1. Before you sign up for any brokerage account, take some time and learn the basics of investing. Even the worst advice in the world may sound good to you if you don’t know any better.
2. If you aren’t particularly good at all things technology related, find an online brokerage that offers a full service plan. That way you can have someone accessible to answer any questions you may have related to investing or just how to use their software.
3. Carefully compare a few different online sites to figure out which one works best for you. Don’t just go with the cheapest costs for making trades. Consider other factors like the trading platform they use and whether or not it is a full service brokerage or a discount brokerage (which usually means a lot less help will be available if you have questions).
As long as you do your part and do your homework, online trading in the stockmarket can be a great way for you to take more control over your finances. Just don’t ever go in blind, educate yourself first and you will increase the odds of making more money.