Online Stock Trading: Freedom of Trade

I remember the first time I started to trade online. It was just before the tech bubble of the late 1990's and the internet was still something new for most people. Purchasing the now forgotten company was easy, and I made a few dollars on that trade. It was so excitingly simple.

Flash forward a couple of years and I have made and lost my share of money. While still ahead of the game, I learned a few things about online stock trading. Freedom is great, but it comes at a cost. Lets have a look at the benefits and the trade offs of online stock trading:

The Benefits of Online Stock Trading

Low commissions - for most people, this is the number 1 benefit of investing online. For $9.99 or less, you can buy and sell your favorite stock. Full service brokerage fees are usually over $100. If you are an active trader, that can start to eat up your profits very quickly. For every $10 000 you invest, you have to make 2% ($200 - $100 to buy and $100 to sell) just to break even.

Quickly act on price moves - another great benefit of online stock trading is being able to quickly act on price moves. With the click of a couple of buttons, you are able to take advantage. With a full service brokerage, you'll have to call first, explain what and why you want to trade that stock and then wait to see what price you were filled it. Odds are, you may have missed the best entry point, and paid 10x the commission for that privilege.

No middle men - No justifying why you want to trade, no having to have someone suggest that a stock might be too risky. You call the shots.

Information - at your fingertips online stock trading can bring much needed and real time info that can help you when to buy and when to sell. Technical charts, real time prices and information sharing can be easily accessed online.

The Drawbacks of Online Stock Trading

No middle men - while I just listed this as a benefit, its also a drawback. The majority of my losses were from stocks that did not meet my investment plan but were simple stocks that were being pumped and hyped up. Often, you end up buying a stock that is moving higher, and end up having to sell at a loss. When you trade at a discount broker, there is no stopping you from making a mistake. With a full service brokerage, your financial planner can help filter out the bad plays from the smart ones. This advice alone can more than make up for commission fees.

Investment Plans - online stock trading doesn't automatically come with an Investment Plan. Why are you buying a stock? What is your exit plan if things don't go right? Will you use margin? Will you buy penny stocks (and if so, what percentage of your portfolio will be at risk)? A full service broker can help create an investment plan. Trading outside of your risk tolerance is one of the biggest risks your portfolio will face.

The best suggestion I can make for you is to look at a combination of both. Trade stocks online, but talk to an investment planner, develop an investment and trading plan first. While you may have to pay for his time, your trading plan will help you to avoid unnecessary risk when you on online stock trading.

investment strategies for trading penny stocks.

1source4stocks.com provides traders with online trading and investment startegies and tips. Free stock picks for subscribers to the Leading Source - http://www.1source4stocks.com

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Currency Trading Information:

Related Articles

Forex Trading - Advantages and Disadvantages
What is Forex Trading?Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another. This market of exchange has more daily volume, both buyers and sellers, than any other in the world.
Reality of Online Forex Trading
Foreign exchange trading is the trading of currencies. Most currencies can be traded.
Trading Timeframes
Long TermLong term traders will work from end of day data and look to hold trades for a few weeks up to many months. Usually trend trading.
Forex Profits
The Forex Market-What, When and Why?Forex, FX and the Forex market are some common abbreviations for the Foreign Exchange market. Actually it is the largest financial market in the world, where money is sold and bought freely.
Advantages of Trading FOREX Over Stocks and Commodities
There are many advantages to Trading FOREX as your main income generator. Let's start by something that may be worrying you already.
Online Forex Trading
Foreign exchange currency trading is also known as Forex trading, or FX, and has no single physical marketplace like the New York Stock Exchange does on Wall Street in New York or the Tokyo Stock Exchange does in Japan. The New York Stock Exchange and the Tokyo Stock Exchange online traders are limited to making purchases during the actual trading hours governed by New York Stock Exchange hours or the Japanese Stock Exchange's Tokyo hours.
How To Control Fear And Greed In Trading
There is an old saying that the market is driven by fear and greed. Anyone that has placed more than a couple of trades will surely have experienced these two emotions.
Why Demo Account Performance Is Often Better Than Real Account Performance
Over the past several years, the popularity of online currency trading has grown substantially. Each day, online FX brokerage firms attract new investors - each of them lining up with a glint in their eye, lured in by promises of easy money.
The Basics of Forex
Foreign exchange market is also known as Forex or FX market. To date, it is the world's biggest "economic bazaar".
The Meaning of FOREX Price Charts and How to Use Them
There is one very important factor that you should consider with great care if you are willing to become a successful, profitable Forex trader. This ever important factor that must be always present in the trader's portfolio, is the ability to read the charts.
Forex Broker Involvement Optional
To trade on the forex market, the largest financial market on the planet, one must use a forex broker. Not unlike a stock broker, a forex broker can also makes suggestions about which moves to make when exchanging foreign currency.
Welcome to the World of Currency Trading
Indeed large multinational and individual banks and other major financial institutions have dominated FX trading (also known as Forex trading), but there is a paradigm change in the nature and type of investing. According to one estimate, in the new millennium, there are over 6 million online investment accounts, up from 1.
How To Choose Wisely A FOREX Broker
Most traders use a FOREX broker to handle their transactions. What exactly are brokers? Strictly speaking, brokers are individuals or companies that buy and sell orders according the investor's decisions.
Stopping Yourself
I read on a bulletin board a traders comment that on his first outing trading the E-Mini S&P 500 he lost on each of his trades. He noted though, that had he had a wider stop each of his trades would have been profitable and that therefore he would be trading with a wider stop in future.
Forex Trading Systems
The foreign exchange currency market is the largest market in the world because it trades up to $1.9 trillion daily.
Assessing the Opportunities Presented by the New Iraqi Currency
Could it be possible that you are staring right into the most spectacular financial opportunity of the century? Operation: Iraqi Freedom will undoubtedly be a war marked in history for loss and tragedy, American victory, and the rise of a nation with a new democratic government. But could it also be a war historically remembered for the financial opportunity it created for the sharp investors who keenly recognized an ephemeral chance at the right time?The War on Iraq ended with a nation placed on the footstool of many new operations.
New Opportunities with Forex Trading
The simplest definition of currency trading is the practice of exchanging one country's currency for another country's currency. Basically, currency trading involves four main variables: currencies, exchange rate, time, and interest rate.
Online Stock Trading: Freedom of Trade
I remember the first time I started to trade online. It was just before the tech bubble of the late 1990's and the internet was still something new for most people.
Creativity in Trading
"Is it important to be creative in your trading?"I'm not sure I can describe it in terms of importance. The creative process is somewhat of a mystery, even to scientists who study it.
A Fools Game
I received an email this week with a question (below) which caused me to think about the wisdom of pursuing trading as a career. Regardless of your trading time span, the skills and concerns of active short-term trading are relevant to all market particpipants.