Trading stocks online is not as simple as one might think. There are a lot of options to consider, and a lot of scams to be aware of.
One of the first things to think about is the amount that you want to invest. A lot of brokers have minimums, and they can range from $1,500-$3,000 all the way up to $100,000+, and even a few millions. Now, if you don’t have a lot to invest, don’t run away looking for the lowers minimums!
One other point to keep in mind is the amount charged for each trade. Those range from a set amount, like $9.99, to a percentage of the whole trade amount. As with deposit minimums, don’t go around, selecting a broker with the lowest fees. Keep in mind that the level of service is important as well, especially when it comes to online stock trading. Before you select an online broker, go to Google and do some research. For example, type in “BROKER NAME reviews”, or, to see a more diverse picture, “BROKER NAME complaints.” Of course, replace the BROKER NAME with the name of the actual broker that you want to read the reviews for.
Once you found a broker and opened an account (it can take a few days sometimes, because they need to verify your information!), you can start your stock online trading. However, there is one thing to keep in mind – don’t buy and sell a lot of stocks on the same day! If you do, you will be marked as a pattern day trader. Here’s some more detail: if you buy and sell a stock on the same day, and do that more than three times within a five day period, you will be subject to regulation. So let’s say that you bought and sold two different stocks on Monday, and then bought and sold another stock on Tuesday. That means that for the next three days you cannot buy AND sell the same stock on the same day (any stock, doesn’t have to be one of the ones you traded already), giving you the next chance to do that in the following Monday.
What does it mean when you’re marked as a pattern day trader? You’ll be required to have at least $25,000 in your account, and also open a margin account. So keep that in mind.
One last thing to look out for – scams! There are a lot of websites out there that want your money and your personal information. Always double-check a broker’s website, and do some research!