Stock trading is often pitched as an option to expand one’s investment portfolio or to actually start investing. Stocks are naturally highly volatile in prices. Therefore, stock trading is something of an art that requires skill.
More and more newbies are entering the world of online stock trading with many expectations, and only a little knowledge. If you are just starting out as a stock trader, here is a list of things you should know before you begin:
It Must be the Right Investment Strategy
Investment options can be broadly categorized into activities that require a lot of input and activities that can be partially automated. Most 401(k) investors and retirement fund savers prefer a hands-off approach, where interest on investments can compound without constant attention. For example, an individual retirement arrangement (IRA) is a financial vehicle that allows account holders to invest without much input. Stock trading is nothing like this. Stock traders need to constantly monitor stocks to trade the best assets. If you think stock trading is an easy way to make money, think again.
Knowledge is Power (or Profits)
When it comes to stock trading, knowledge is the ultimate source of power. To become a successful stock trader, whether offline or online, you need to first understand the asset inside and out. You will need to read the news, scan through industry magazines, and otherwise educate yourself about the source of the stocks. If not, the risk of making a costly mistake is high.
Fortunately, there are plenty of online resources for investors to learn about stocks. It’s highly recommended to use online robot advisors or trading platforms. You can separate the good online resources from the bad ones by reading reviews, such as this Warrior Trading Review. What’s important is understanding that staying up-to-date with current events is a must for trading stocks. If you don’t like reading the news, then stock trading may not be for you.
Good Support is Necessary for Online Brokers
It’s very common for new investors to use online brokers for trading stocks. Don’t judge the online broker based on the trading software alone. The best online brokers have two things in common: great customer service and educational resources. For beginner traders, these two things go hand in hand with ultimate investment success. Therefore, when you choose an online broker, make sure excellent customer support is on the books. The stock education platform Warrior Trading, for example, has actual Wall Street brokers providing customer support. Online stockbrokers without similar support structures may only pose problems in the future.
You Need to Research Your Own Stock
Trading stocks require a lot of research as mentioned above. So do picking stocks. Don’t rely on an online broker or a robot advisor to tell you which stocks to buy. The investor should do his her own research into which stocks would perform the best. This means staying up late to read the news or checking your phone constantly to learn from current events. Traders may also have to investigate the companies behind the stocks.
An experienced stock trader or a day trader would know all of the above. Stock trading isn’t glamorous and does involve a lot of work. Investors new to the day trading world should, therefore, plunge in with the above in mind.