If you want to learn how to trade securities online, the most crucial thing is to understand the fundamentals before putting real funds at risk. Fortunately, most web-based brokerage sites allow new members and visitors to utilize a simulator. It’s a great technique for using fictitious cash in a mock account in order to pick up the key points about the mechanics of trading. What is there to learn, and how much time should you expect to devote to the endeavor?
When buying and selling shares, it’s most important to get familiar with the most common kinds of orders, the dashboard commands, and all the particulars of the brokerage you choose. No matter how many hours per day you intend to trade, or how much money you’ll eventually be putting at risk, here are the four building blocks of the process. Once you have a handle on these concepts, you’ll be ready to hit the simulator and try your hand at some practice trades.
Open an Account
Learning the basics of how to trade means many things, but before you move from square one, you must open an account on your chosen platform. Of course, every company has its own little quirks, rules, and limitations for newcomers. However, you will most commonly run into three things: minimum balances, transfer of funds, and trading limitations. Transferring money into an account is usually a simple task. Just be sure to read the fine print because some brokers will ask you to wait one or two business days before the funds clear and your application is approved.
After that, be careful to not go below any account minimums, which are typical in the business. The good news is that for new accounts, minimums are generally quite low. Finally, read the rules about how many and what kinds of transactions you are allowed to make. Some new traders are not able to buy or sell options or futures, for example.
Decide Which Shares You Want to Buy
Check out the most recent financial news and choose between one and three companies whose shares you believe are stable and are prone to go up in value in the future. There are hundreds of online resources for analyzing companies and their relative strengths. If you want to stay on the safe side, only select shares of long-standing companies or blue chip stocks. In any case, once you begin putting your own funds on the line, you should have a systematized method for picking stocks that you feel are set to rise in value.
Learn to Follow the Ups and Downs of the Market
Keep an eye on the financial headlines and major stories. It’s a good idea to spend at least 15 minutes checking in with one or two reliable news sources every day. That way, you won’t be in the dark about any market moves, economic news, or trending financial stories.
Execute Purchases and Sales of Specific Securities
After working on the simulator for a few weeks, begin purchasing the stocks that interest you. Don’t expect to make money overnight. Be patient, watch the daily price changes, and never put more than 5 percent of your account balance into a single security. Spread out your buys and know what price levels will cause you to sell, on the high side and the low side. Better to bank gains and cut losses than let your money ride into an uncertain future.