The Beginner’s Guide to Online Stock Trading
The good news for today’s online stock traders is that there is certainly no shortage of online stock trading websites and brokers from which to choose. Unfortunately, with so many options, it can be tricky to know which option is the best. It may take a little bit of research to find the right fit for you, but choosing the best possible online stock broker is an essential part of being a successful stock trader or investor. Now, before we get into the world of online stock trading, let’s take a look at the basics of the stock market.
What are Stocks?
A share of stock is essentially like owning a tiny piece of a corporation. Shareholders (the people who buy stock) are investing in a specific company and the future of that company, for as long as they own their shares. The price of a share will vary based on a few factors, such as economic conditions, the performance of the company and investors’ position.
How to Make Money Investing in Stocks
When a company makes a profit, it shares that capital with its stockholders by issuing a dividend. A company can also save its profit or re-invest it by making improvements to the company. Stocks that deliver regular dividends are income stocks, while shares in companies that reinvest their earnings are called growth stocks.
What is an Online Stock Broker?
An online broker will buy and sell stocks through an exchange and charge a commission to do so. A stockbroker is a person who is licensed to trade stocks through the exchange and either on the trading floor or by making trades by phone or electronically.
You can compare an exchange to a warehouse in which people buy and sell stocks. In this “warehouse” a person or computer must match each buy order to a sell order, and vice versa. Some exchanges, such as the NYSE, work as an auction house on an actual trading floor, while brokers match buyers to sellers electronically.
Some examples of major stock exchanges are:
- The New York Stock Exchange – The NYSE is an auction style exchange that takes place on a trading floor
- The NASDAQ – The NASDAQ is an electronic stock exchange
- The London Stock Exchange – The LSE is the third largest stock exchange in the world
You can find a comprehensive list of all major exchanges on Wikinvest Worldwide Stock Exchanges list. Information on over-the-counter (OTC) stocks that have not been listed on a major exchange can be found at the OTC Bulletin Board.
Market Trading Online
When you want to buy and sell stocks online, you will use an online stock trading software that mainly takes the place of a human broker. You are still using real money, but instead of discussing your investments with a broker, you ultimately decide which stocks to buy and sell on your own, and request the trades yourself. Many online stock trading websites offer advice from live brokers, as well as providing broker-assisted trades included in their service.
If you are just starting out in market trading online, you may want a broker to help you with your trades. Therefore, be sure to choose an online brokerage that offers that service.
Choosing the best online stock brokers
When choosing between the best online stock brokers, it’s important that you look into reputed websites for additional broker comparison. While you are on our site, make sure you click “read review” to get a full understanding of each broker and their offerings. An excellent online stock trading platform should have the ability to execute the trades you order quickly and to manage these trades from your online account.
Characteristics of online stock broker sites
An online stock trading website is different from the standard trading and investment website. An ideal online stock trading site should allow simple navigation, for all types of stock traders, whether they are a novice or experts. Furthermore, traders should have access to various market types through the site, including up-to-date research by professional analysts.
Finding the best place to buy stocks online comes down to making sure that you ask the right questions and determining your unique trading needs.
Tips on choosing the best online brokers for stock trading
Of course, before you can begin to trade stocks online, you will have to select an online broker. Your chosen online stock broker will execute your trades, as well as hold your money and stock in an online trading account. Keep in mind; different brokerages tend to offer different levels of trading assistance and other various services. Here are some of the main things you should keep in mind as you look for your ideal broker.
- Determine how much money you plan to invest. Most firms will require their investors to have a certain amount of money to open an account. Be sure to check the minimum deposit amount at your prefered broker.
- Establish how frequently you plan to make trades. Do you plan to buy stocks and hold on to them? If your answer is yes, you’ll need to make sure the firm doesn’t charge fees for account inactivity. However, if you plan on making a lot of trades in a short period, you’ll want to look for a lower fee per trade. Regardless of your intended use, you should evaluate how much using the site will cost you.
- Consider your level of trading experience, and determine how much guidance you will need. Many of the less expensive online stock trading platforms don’t offer much in the way of market research or broker-assisted trades. Others, while still moderately priced, do offer market analysis and help from licensed brokers.
- Decide how you and where you would like to trade. Many of the best online stock trading websites will provide you with essential trading tools and a stock trading apps or a mobile stock trading platform.
In conclusion, there is no one best online stock broker, but by comparing each option, you will find they have different strengths and weaknesses. Our mission is to spotlight those pros and cons to help you find the best choice for your investing style. Read on for a more in-depth look at what you should look for when choosing the best online stock trading websites.
How To Find The Best Online Stock Trading Websites
With all the different options available for online stock trading in the United States, deciding where to buy stocks can seem like quite a complicated task. Here we will cover some of the most important things to keep in mind when you are comparing the best online stock trading websites and investment companies for your needs:
Regulation
Each country has its own regulatory body. The regulatory body is in charge of ensuring the rules and regulations are met and followed. This helps protect and maintain the integrity of the market, including traders, investors, and the brokers themselves. For example, The Securities and Exchange Commission (SEC), part of the United States federal government. To avoid any potential safety concerns with regards to the deposit, you should always make sure that your accounts are held with regulated trading firms.
Customer Support
Before choosing between online stock brokers, you’ll want to see how complete their customer support department is. For your security and peace of mind, you will want to be able to reach and get the help you need without waiting too long to be answered. Some companies offer 24/7 customer support with a live chat option or even a local phone number in your state.
Tradeable Assets
Once you have selected your ideal online stock broker, it’s possible to just concentrate on just one asset class. However, you should keep in mind there are countless types of investment alternatives offered. These options include assets such as Cryptocurrency, Forex (FX), ETFs, or trading in futures, options or precious metals, to just name a few.
Account Types
Depending on what type you are interested in opening, you will need to know the different account options offered by each online stock broker. While some brokerages offer a broad range of accounts, others have a single account type available. You may want to look for an online broker who has a different account type for beginners, intermediate and advanced stock traders.
Platform Types
Most beginners don’t know how they will be trading. However, most expert traders know that they’ll be trading while on-the-go, so they look for an online broker with an excellent mobile platform or stock trading app. It is best to know what your platform requirements are with regards to online stock trading software. For more information on selecting the right trading platform for you, please see our tutorial: What To Look For When Choosing A Trading Platform
Interest
An online stock broker should provide you all the necessary information about the interest charged when you take leverage. Although there isn’t a huge difference in the interest rates between online stock brokers, it is something to be aware of when choosing a specific broker.
Withdrawals
You will want to look at how long it can take to withdraw your funds once you have completed your trading and buying stocks. Some online stock brokers have fees for withdrawing remaining balances. Some also have long waiting periods for the balance to be withdrawn.
Here at TopBrokers.Trade, we take pride in providing the best possible online trading broker comparison, reviews and ratings. These reviews enable you to select the best stock trading platform for your needs. We don’t just help you to pick a great place to trade, but also do everything that we can, to show you how to get started in stock trading. For additional information on finding the best investment and stock trading platforms, please see our tutorial: How to Find the Best Trading Apps.
