Definition online stock trading
That cuts costs, improves speed, and allows lots of discount brokers to provide better service at lower prices. The ability to trade stocks anywhere, anytime has allowed a lot of people to become day traders. Do day traders make money? Is it worth their effort? Depends if you want to be tied to a computer all day, tracking dozens of stocks online, hoping to get the timing right.
Of course there's also mobile day trading, but how much information can you get from a little screen? Are your thumbs nimble enough to manage the details of intraday trading? That trading has little to do with the underlying value of the stocks. Instead it focuses on finding and exploiting pricing inefficiencies in the market. The goal is to find a bargain, get in fast, and get out as fast as possible. Speed is the name of the game. Online trading makes day trading possible , but not all online trading is day trading.
You can use online trading to make one or two trades a year and have a very successful investing career—if you pick the right stocks. Online stock trading lets you decide what to buy and when, to your taste and on your schedule. Again, this comes down to the question of trading versus investing.
Are you trying to predict what other people will do in the short term, or are you looking for good businesses which will grow and make you money over the long term? In the glory days of full service brokers, your broker probably made recommendations about what to buy and when.
Your broker didn't necessarily have your own best interests at heart. Did your broker ask you about your financial goals? Your broker also probably charged you fees just for handling your account. To be a successful day trader, you need a lot of free time, the desire to read financial statements, a great insight into human psychology, and a lot of money to lose or tremendous luck —but the average person can make money in the stock market by learning a few things about how to invest in stocks and following a safe strategy.
Even if your investment strategy is to put money into an index fund once or twice a year, doing so through an online broker is fast, cheap, and easy. The effort and money you will save will pay off for you year after year. Stock manipulators often float false information and "hot tips" on these sites, as part of an effort to affect the price of shares in a particular security.
Investors are also advised to turn to unbiased sources when researching investments. In the US, the U. Online investors typically invest without help from a trained stockbroker or investment adviser , and may not fully understand the potential risks of investing in a particular security. Inexperienced investors are easy prey for stock manipulators and pump and dump schemes often associated with penny stocks.
For this reason, many online brokers offer a number of investment tools to educate and inform new investors.
Many online brokers provide tools to help investors research and select potential investments. There are also numerous third party providers of information, such as Yahoo! Other reputable sites provide information on business sectors, news and financial statements of individual companies, and basic tutorials on subjects such as diversification , basic portfolio theory , and the mitigation of risk associated with volatility in the stock market.
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