What to Look for in an Online Trading Company

Trading stocks can be a confusing business in its own right. We are seeing more and more people take the roles of financial planners upon themselves and empowering themselves when it comes to investing in the stock market. The prevalence of online trading companies has been instrumental in breaking the barriers between the super wealthy being the only ones that could afford to regularly trade in the market and the average man who now has the power to make the same trades for less than half the commissions that once would have been necessary for the same amount of work on the part of broker.

Oddly enough you need to be careful when picking your onlinetrading source as not all companies are created equally in this manner. One of the first things you need to check out is the security with the company you are considering. In most cases, the bigger names will offer the better security. If it’s a name you know there is some safety in knowing the name. They do not want to risk their reputations by risking your money.

Another thing you will want to check out before deciding to sing up with any one online trading firm is the costs per transaction and how those costs are determined. There are all kinds of ways that little fees can hit you and become big headaches later on. You want to know ahead of time what those fees will be, when they will be charged, how they will be charged, and what exactly the fees cover. The more you clarify from the beginning the less room there is for misunderstandings later on.

Be sure you have a way to discuss problems, ask questions, and get answers should there be a problem or a misunderstanding. This is as important as knowing what the fees are going to be. If you cannot find a way to communicate with an actual person, then I suggest moving along. There is nothing I hate worse than endless cycles of holds and button pushing while listening to bad music and fuming over why my time is being wasted and I’m paying XYZ company for the privilege of them wasting my time.

Can you get around their website and do you understand the charts, bars, and graphs? It is much easier to work on a website that isn’t confusing to you. Granted the first couple of days working on any site are likely to be somewhat confusing the problem is that if you are having too much trouble navigating through the website chances are you’re going to have a little bit of difficulty even in those moments when seconds count. The easier the website is for you to get around the better it is going to be for putting you in the business of making money.

If you can find all these things and more in an online trading website then you’ve probably found a great website to begin your time as a stock market investor. If the website also offers education and advice free of charge please take the time to read through the suggestions they offer for a little bit of guidance so that you do not feel as though you’ve been thrown to the sharks—feeling as though you have someone working with you can make all the difference in the world.

What are the Risks of Day Trading?

If you are looking for a truly risky venture for your investment dollar then you may want to investigate the roller coaster ride that many know as day trading. While those that swear by it for making and breaking fortunes will swear there is a formula those that have been raked onto the rocky shores of this particular trading business will be the first to tell you that their luck ran out. Whether it’s luck or science, day trading for many has proven to be risky business at best.

The Risks

In order to be successful in day trading you must be absolutely prepared to lose. You do not have time to think about failure, as it is likely at any moment. This is a lightening quick business and sometimes the market moves much more quickly than your fingers. This can result in unexpected losses as well as unexpected gains along the way. These bumps in the road are nothing compared to the highs and lows of actually being a day trader though. Forget the finances for a moment and consider the risks of heart attacks, heart palpitations, and strokes brought on the by excitement and heartburn (not that this can bring about a stroke but it sounded good) of the moment.

Day trading is very taxing. You must constantly watch your computer throughout the day for signs of life from your stock and act immediately. This is a high stress job that many simply cannot handle long term. Unfortunately day trading must become your day job because you have little time or energy to invest in anything else. There are those that get a huge charge from day trading but this is not a job for the average citizen it takes a huge toll on their health much too quickly—especially those that are sensitive to stress as it is.

Perhaps the biggest risk is that you can become addicted to the highs and lows. This is a huge problem because once you become addicted it is much more difficult to temper your purchases and counter your losses. When you aren’t looking at it with a clear mind and unhampered perspective it doesn’t seem nearly as dangerous as it can be. Lives are ruined financially because of irresponsible day trading and addictions to day trading that are much like addictions to gambling. If you suspect you or someone you love is the victim of this particular addiction please get him or her or yourself the help that is needed as quickly as possible.

You should also understand that day trading isn’t investing in the strictest sense of the world. Day traders don’t invest in stocks so much as they trade stocks and while some may claim this is a simple case of semantics there are a few major differences. Investors hold onto stocks for a little while with the expectation of gains over time while traders buy and sell quickly hoping for immediate gratification. Investors research and study a specific stock before jumping in while traders study patterns and formulas and hope they made the right decision.

Investing in and of itself is risky; day trading adds another layer of risk to the equation. If you think you have what it takes to participate in day trading you need to keep in mind that you should make sure that you have a few other options in place for your investment future that require a little less risk.

What are the Risks of Trading Penny Stocks?

You will hear about all kinds of risks that are taken when playing the stock market game. There are high-risk stocks and investments along with many low risk mutual funds and everything in between. When it comes to high-risk investment options, penny stocks often top the charts as some of the highest risks you will find in investment circles. Of course, they also offer some of the highest yield of any other stocks as well because the prices start so low and the sky is literally the limit. Do not get stars in your eyes however when considering penny stocks as investments because there are many that have gone before you into that type of investment and relatively few that have come back from the brink as wealthy men and women.

Of course reason is rarely a good bedfellow for ambition or dreams and the low prices of most penny stocks it’s perfectly acceptable for even the common man to have a few dreams of his own when it comes to obtaining wealth by playing the stock market game and there is a much greater thrill with penny stocks than you will find in any casino with penny slots. 

Some of the common risks associated with penny stocks may not be risks one would commonly assume are related to the stock market. The thing you need to remember is that trading penny stocks isn’t regulated in the manner that the major stock exchanges are regulated. This means that a large safety net that others in the stock market are protected, to some degree, by does not extend into the murky waters of penny stock trading. It is the forgotten child of oversight and investors are left to fend for themselves.

The first risk is fraud and this risk seems to be rampant in the penny stock market. You will find all kinds of fraudulent penny stocks that are heavily marketed by overseas companies that look glossy and legitimate on the Internet, in investment magazines, and through many brochures, and even several carefully crafted and well written press releases, newsletters, and emails. The problem is that there is no product or the demand is deceptively overrated and the stocks are essentially junk stocks worth nothing, if they exist at all. The “businesses” in question take the money, dump, and run never to be heard from again. Unfortunately this is quite common and many of the “companies” that perpetrate the frauds are located overseas. This is the biggest risk though certainly not the only risk

The other risk is that the companies that are listing penny stocks are often smaller businesses that are building or larger businesses that have fallen off the major exchanges radar for one reason or another and are either going through desperate restructuring or failing all together. Both pose very real risks but if you choose to put your faith in the right new business or old business that is getting its act together the proper way you can find amazing profits on the other end of the roller coaster ride.

The other risks that are involved when trading penny stocks are the lack of financial reporting. Corporations and companies that trade in the major stock exchanges are required to release their financial information and account to their stockholders. The same doesn’t hold true for penny stocks. There is no accountability and very little public information. This means you have to really dig to find out credible information about the companies you are considering and are left going with your gut more often than not rather than relying on legitimate information that will be beneficial in your investment decisions.

Penny stocks are very lucrative to those who manage to pull off the investments and come out ahead. There are few instances in which there is little profit with the lion’s share of these investments yielding substantial profits for investors.

No comments