ONLINE STOCK BROKER

ONLINE STOCK BROKER

A stock broker is an individual who is affiliated with a brokerage firm, trades in stocks (i.e. buys and sells) and is compensated a percentage in return for his keen business acumen. They vary from each other in the licenses that they possess, types of securities sold by them or services they are capable of rendering to potential investors.

A stock (otherwise termed shares or equity) is security which shows a significant stake or ownership of the assets and/or earnings of a corporation. It is, simply, a small piece of a large company. The higher the number of shares/stock a person owns in a company, the higher the person’s claim to ownership of that company’s assets becomes. Say a company has a total 500 shares of stock and one person owns 50 shares, then that person is entitled to lay claim to 10% of the company’s assets. Stocks are traded through an exchange. The broker is one who is then licensed to buy and sell these stocks through the stock exchange.

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At first, the business of trading stocks was done more through telephone calls and physical communication. This was popularized by the famous Wall Street stock trading outfit and still is. Although, with the advent of the internet, the whole game has changed. Now everyone who has access to the World Wide Web can learn about trading and even start investing in stocks and buying shares, in the hopes of their subsequent appreciation and huge payout for them.

Buying and selling of stocks online imply the usage of an online stock broker which replaces the human. It does not change the fact that liquid cash is being used and you are the one in the driver’s seat of the decision making vehicle moving towards your investment goals. Some platforms even give brokerage advice from real brokers as part of the package.

Stocks and shares, as with commodities in general, operate on a supply and demand basis. The higher the demand, the more the price to be paid for the product and the other way around.

RULES FOR TRADING/INVESTMENT

1. Plan for trading: This entails looking inward and digging deep to know whether you have the stomach to house all the risks you are about to take. Then going on to set realistic goals and get profit to start trading and investing. Plan yourself very well before jumping in the ocean of investment.
2. Set goals: you need to have a long-term and short-term plan such that the completion of all the short-term plans will indirectly lead to the fulfillment of the long-term ones. The kind of goals you set will determine how hard you will be willing to work to achieve it because no one will motivate you more than yourself.
3. Knowledge of the market: This right here is a must-have. You cannot navigate a particular terrain without having driven there before or having it mapped out for you. Same goes for stock trading.

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CHOOSING AN ONLINE STOCK BROKER

Proper selection of the platform on which you will be risking your hard earned money is paramount in this respect. That is where your money will be stored so security is necessary for the choosing process. A reputable brokerage firm is also a good bet when it comes to selection. Different brokerages have their different pros and cons and you should be able to find the perfect one that fits you like a superhero suit. Here are some factors to consider when going about the selection process:

• Money to be invested: Some of the online brokerages will not allow one trade lest they have a particular amount of money to trade with. Meaning you must have a certain amount before an account is opened for you. Some have a minimum account balance (the lowest amount of money allowed to be in your account for trading)
• The frequency of trading: This varies from person to person as most people who buy these shares and involve themselves in stock trading do so as a side gig, second only to their main sources of income. This should prompt one to question oneself on how often users of the sites will cost.
• Trading experience: Some firms will offer assistance from time to time in the form of assisted trades by their AI system which they have specifically programmed to read the market and forecast on the rise and fall of companies, currencies, and commodities based on pattern specified in the source code or they may connect you to live brokers who will give you real-time analysis, feedback, and advice (for a small fee of course).

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FUNDING ONLINE ACCOUNT FOR TRADING

Opening an account immediately prompts the firm to throw questions at you asking you to detail your investment history as well as financial history. The questions aim to determine how to fit you are to own an account with an online brokerage firm because they will not allow you access to investment opportunities of the kind which you cannot handle. Other details will be asked of you as well. Mostly phone number, house address and other personal information which you would not have a problem giving out so as to have that opportunity.

You will also be asked to choose between different types of accounts such as individual, joint, custodian or retirement accounts. It is similar to a bank in that respect. Next, you will be asked to choose between a cash account and a margin account. The cash account is similar to a checking account at a bank while the margin account is one where you can borrow from the brokerage firm and use the equity if the stock bought as collateral.

Once you’ve decided on which to open and which not to, you can now fund the opened account using a check, wire transfer, or funds from other brokerages.

TRADING STOCK

Now that you’ve reached the bridge, it’s time to cross it. The account is all set up and funded, let the trading begin! The cost of the stock has to be confirmed first with the aid of a “real-time stock quote” which quite simply means the price at which a certain party is willing to accept for shares. Many brokerages offer this service as part of the deal. Some proffer the option of a “delayed quote” which can lag several minutes behind the market thus making it considerably different from the current/real price.

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Next, a market/limit order is placed once it is decided, which stock is to be bought. The market order lets you buy at the current price of the stock while the limit order allows one specify or buy at a more favorable price. Brokerages often help to prevent massive losses by offering a few options when trading. They are thus:

• ·   Stop order: Here, the buyer sets a price termed “stop price” and once the price has fallen through this set amount, the order executes.
•     Stop limiting order: Unlike stop order, this allows for the user to set the order to execute at a specific price.

The online stock brokerage game is definitely not a joke and not for the faint-hearted or those unfamiliar with taking risks and swimming at the deep end of the waters.

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