The innovative cyber landscape has opened up a lot of possibilities. Gone are the days when the trading of shares was an exclusive preserve of big financial institutions and banks. Through cutting edge share trading software which comes with reportage and charting features coupled with comprehensive data for share trading analytics, any eligible person with good internet access can get started with online share trading.
Defining Online Share Trading
Online share trading is all about executing buy/sell orders for financial securities. This can be done for currencies through the services of online brokerages. Online share trading is facilitated by the innovative web based proprietary trading systems. Since the 1990s, the online share trading industry has been booming thanks to the huge strides in information technology as well as the opening up of the regulatory framework governing global money and stock markets.
The online trading industry entails various instruments and commodities that can be traded. These include, currencies, stocks, bonds, futures and options. [Investopedia]
Advantages of Online Share Trading
Every cyber business is heavily impacted upon by the reality of cut throat competition. Online competition is just a click away. This presents great dynamics in the online share trading industry as brokerages need to maintain competitive rates by keeping their fees and rates at the minimum possible. What this means is that those interested in online share trading can take full advantage of the affordable brokerage costs. Some brokerages can afford to shed some of their savings towards affording new and existing clients low trading fees and discounts.
Online share trading business can also be viewed as the buying of shares of certain companies with the prospect of reaping profits when you resell the shares at a higher price in future. Just like any financial investment model, share trading is not necessarily a surefire way of making money either in the short term or long term. Profitability is possible if the shares can be sold at a higher price than the price they were bought at. What the foregoing implies is that if the share prices go down then the shares owner does not have any opportunity to make profit with the shares and this means loss.
So how can you profit from the Online Share Trading Industry
This is where you need to understand the broader dynamics of online share trading. The innovative share trading systems enable traders to make well informed decisions such as which corporates to invest in, i.e. which company shares are likely to accumulate value with time?, etc. Traders can patronize online share trading forums but what is key is understanding global events and how these impact the shares market. Key to this is working with comprehensive brokerage platforms which have all the features for analyzing global developments and news that impact on share trading.
In this section we feature some of the top Online Stock Trading Sites you can consider for trading shares online.
Online Stock Trading Site: Which one is the best?
The incredible progressions in technology have opened up a lot of opportunities in the forex market. Cutting edge innovation has enabled the widening of access to the forex market to a wider spectrum of players. Almost every eligible person with good access to the internet can access an online stock trading site and get onto stock trading right away. As a newbie, it is not easy identifying the best sites to start your stock trading thrust. Before you can even get to this post where we are exploring the best online stock trading sites, you need to be equipped with adequate knowledge and expertise on how to trade stocks successfully.
When you’ve got a grip of how stock trading works you then need to decide whether you will go the offline or the online stock trading route. This article is for those that are looking for the best places to buy stocks online. Take note that the really best online stock trading site can be best decided by you on the basis of your needs, skills and risk capital interalia. Many beginners struggle with identifying the best online stock trading sites. This article is aimed at exploring some of the online stock trading sites we hold in high esteem.
Scottrade is one of the cheapest online stock trading sites. The company does not charge annual fees for offered services. Also, stock traders can enjoy free trades set up and the liberty of knowing that you will not be billed for inactivity or maintenance somewhere down the line. The only downside with Scottrade is that you will be charged an extra amount upon your principal trading sum. Nonetheless, we find the company to be one of those great and affordable sites for newbies who want to start buying stocks online.
This one takes the number two slot in our list. You will see Fidelity.com on various rankings and ratings of online stock selling sites. Cost and affordability is not all that defines a good online stock selling site. Customer satisfaction is one of the major determinants of a good stock selling site. This is the reason why Fideligty.com tops several rankings of online stock selling websites. Fidelity prides itself in thorough and comprehensive stock market research. With Fidelity, traders can talk to expert advisors face-to-face at designated fidelity investment centers.
FirstTrade is our third place entry. The company is great at enabling traders to consolidate their investment activities in just one account. FirstTrade has made waves as the top online stock trading broker that offers the most no-load mutual funds with no transaction fee. This is according to the Kiplinger survey. Despite the higher commissions the company charges, as a trader, with FirstTrade you will have no opening, quarterly or annual fees to pay. The company has other lucrative features such as a friend referral incentive where traders can enjoy up to 5 free trades depending on the set milestones.
TD Ameritrade is the child of mergers involving Ameritrade. The company makes it to our top five list owing to its huge array of mutual funds. TD Ameritrade is also lauded for its top of the range customer service.
If you want to cash in on lucrative discount offers TD Ameritrade is your best bet. The company presents a robust online trading platform that will give you access to limitless trading. The downside with TD Ameritrade is that as a trader you are required to pay a considerably hefty annual fee. Also, traders are required to conduct at least four transactions in every 6 months. Failure to comply to these conditions will attract additional fees. Despite all these downsides, many expert and beginner traders choose TD Ameritrade as their best stock trading site.
The list of the top online stock trading sites will not be complete without E*TRADE. E*TRADE has a wide range of offerings which span mutual funds and banking. The company has carved a formidable position in the stock market by incorporating other brokerages. E*TRADE is also famous for its competitive trading rates and fees.
Day trading stocks
The growth and evolution of the global money and stock markets have opened up great opportunities. With the great developments in these markets many players can now participate in the lucrative stocks and currencies industries. The nature of the stock market enables traders to profit from same day trading. This means that with the buying and selling of day trading stocks traders can enter and exit trade positions on the same day.
We have published an in-depth guide on Stocks Trading and How it works. Visit the article here:
If you want make money with day trading stocks you need to understand how this business works. Part of that is understanding that not all stocks are suitable for day trading.
So, What are Day TradingStocks?
In the day stock trading business traders make money by leveraging large amounts of their investment (risk capital) to cash in on the small changes in the prices of stocks. Not all stocks are suitable for day trading. This means that as a trader you need to know what stocks are appropriate day stocks to work with for your thrust.
It is not necessary to list the stocks here but what is key is to know how to identify day trading stocks.
You can also look at this as understanding how the stocks can be classified as day trading stocks. When looking for day trading stocks there are two key aspects to consider, spreads and low slippage.
Let’s begin with explaining spreads.
IntoForex Defines “spread’
Spread in stock trading refers to the difference between the bid and ask price of a security or an asset.
By extension, in stock options trading a spread denotes the position established by purchasing one option and selling another option of the same class but of a different series.
In stock trading slippage refers to the difference between expected price of trade and the price at which the trade is actually executed at. Slippage normally obtains in times of higher volatility.
News events have a huge impact on the stock and forex markets. In forex trading, slippage may be a result of volatility triggered by news events, making an order impossible to execute at a specific price. In stock trading, slippage takes place when there is a change in spread. In a slippage situation an order placed by a stock trader is executed at a worse than expected price.
So, when it comes to day trading stocks spreads and slippage play a very big role. The foregoing empowers you to pick out the ideal day trading stocks. What should follow after identifying these stocks is to learn how to identify profitable and strategic entry points. This article presents three major tools that are important in identifying the best entry points for trading day stocks.
Like we have mentioned before, the stock market is very volatile due to many factors as well as that currency and stock markets are highly influenced by global news events. This is why listing the recommended best day trading stocks is not the best way to go about it. This post was about helping you to understand what characterizes a day trading stock. Once you know how to identify these you can then learn the strategies of going about stocks day trading profitably.
Stocks Day Trading
Stocks Day Trading refers to the business of buying and selling stocks within the same day. How is this possible? In the stock market, stock day traders seek to gain profits through leveraging large amounts of risk capital as a way of taking advantage of the marginal price shifts in the highly liquid stocks or indexes.
What Kinds of Stocks are Ideal for Stocks Day Trading?
Not every stock in the market is ideal for stocks day trading. There are basically two attributes that can help a trader identify stocks that are best suited for day trading. The two aspects are, tight spread, and slow slippage. These two factors can enable the trader to identify stocks for day trading. While considering these factors take note that volatility is simply a measure of the expected daily price range. This refers to the range in which a day trader can operate. What you need to understand as a trader is that increased volatility means two possibilities, greater profit or greater loss.
Now that you have considered stocks that satisfy the tight spreads and low slippage criterion, you then need to move on to learn the art and science of identifying strategic stocks day trading entry points. For this exercise, there are basically 3 tools for achieving this.
Intraday Candlestick Charts: In day stock trading, candlesticks provide raw analyses of the price action.
Level II Quotes/ENC: These provide reportage on orders as they are executed.
Real-Time News Service: This tool reports on latest global developments that have impact on the stock market.
The last item, Real-Time news Service plays a critical role as it enables you as a trader to identify your strategic entry points. Remember that the stock market is a global market and this means that the market is influenced heavily by events and developments from around the globe especially those developments that closely involve major currency countries.
Check the post on Trade Forex News in order to understand the important role of news in stocks and money makers. You can actually make a lot of money trading forex news.
Intraday candle stock charts also play a vital role in helping traders to go about day stocks trading thoughtfully and systematically. Using Intraday candlesticks charts requires a grasp of candlestick patterns (engulfings and dojis), technical analyses for understanding trendliness as well as triangles. The learning curve should also cover understanding volume. Volume in this context refers to the aspects of increasing and decreasing volume.
Using candlesticks charts is about identifying certain patterns and looking for a desired pattern with several confirmations.
One of the aspects to look for is the volume spike; this is an important indicator of whether the market is supporting the price up to this point. The spike can be located on the doji candle or on the candles that come after it. The second aspect to look for in the use of candlesticks is prior support at the given price level. This specifically focuses on the prior low of day (LOD) or high of day (HOD). The last aspect to be considered in this crucial exercise is the Level II situation. This aspect indicates open orders as well as order sizes.
Following these steps helps the stocks day trader to establish if the doji is likely to yield a turn around so that the trader can take that position if the conditions are positive. In normal stocks, day trading entry points are identified through the use of a combination of all these tools. This helps the trader to go through their trading activity in a well-planned and thoughtful manner.
One of the great resources to explore for understanding day stock trading is the How Stuff Work resource. The resource also presents stocks day trading terms and explanations. The Investopedia Resource, Day Trading Strategies For beginners is a great article for understanding how stocks day trading works.
Trading stock options: Is it rocket Science?
To define stock options let us extract this explanation from the options guide:
A stock option is contract binding two parties where in the stock option buyer (holder) buys the right to (and not the obligation) to buy or sell the 100 shares of an underlying stock at a preset price either from or to the stock option seller (writer) within a defined (fixed) period of time.
In this resource we have explained what trading stock options is all about; Stock Option Trading Information. If you want to understand more about stock options and the advantages of stock options trading have a look at this post on The Benefits of Trading Stock Options
So How Do you get started in Trading Stock Options?
What you need to do in order to start trading options is to open a stock options trading account. This means you must have identified the best stock options broker. Once the account is set up you can then place options trades with your brokerage. The work of your broker is to execute the trade actions on your behalf.
Difference Between Cash Accounts and Margin accounts
At the account opening stage you will be asked if you want to get a cash account or margin account. A margin account enables you as a trader to make use of your existing holdings; these can be long term stocks or long term options, as collaterals to borrow funds from the brokerage so that you can make additional purchases. With a cash account your purchasing activity is limited to the available cash held in your trading account for financing your stock and options trades.
Different brokerages accept varying minimum deposits. One of the major determinants of the minimum deposits required is the type of he trading account you want to open. For a cash account you can get started with very minimal or no deposit. On the other end federal regulations stipulate at least $2000 to for the opening of a margin-enabled account.
Online Stock Options Trading Versus Offline Stock Options Trading
This is one of the major areas where you need to be very clear with what you want. To make a well informed decision you need to understand the difference between offline and online stock options brokerages. What you also need to understand are the implications of choosing one approach over the other. Many traders prefer trading stock options online for effective trading. One of the reasons is that stock option trading has many variables to it as compared to simple stock trading. This implies that there is a lot of communication that goes with stock options trading hence offline trading would not be the ideal approach. Instead of communicating all the trade details over the phone with your broker in an offline approach, all that can be easily handled online if you have an online stock options brokerage account.
Not only do online stock options brokerages alleviate communication requirements. In an online brokerage you can quickly and easily place opting trades instead doing this over the phone. The other upside to going with an online brokerage is that unlike in offline environs, online brokers can handle thousands of orders at one go.
Needless to say, the crucial point in your stock options trading endeavor is choosing the best stock options brokerage. You can only be in a good position to choose the best stock options trading brokerage when you have mastered the basics of stock options trading.
Stock Option Trading Strategy
Online stock option trading requires that you have a strong trading strategy. There are many resources and approaches you can empower yourself with so that you can build a winning stock option trading strategy.
Options strategies are a formidable way of investing and leveraging positions for investors. The strategies can be categorized as bullish, neutral and bearish strategies.
Bullish Options Trading Strategies
This category embodies various trading strategies. The long call options strategy is one of the most popular. This one best suits investors who are bullish about short term potentials of a stock. Buying calls in stock options trading can be a great way of netting the upside prospects with limited downside risk.
The other bullish options strategy is covered call. This one is for conservative investors who want to gain the prospects of selling calls against a long stock position so as to generate profits without taking the risks that come with uncovered calls. In this strategy, investors sell one call contract per 100 shares of the stock they hold.
The protective Put strategy is for investors who want to keep stocks in the portfolio safe from plummeting prices. Protective puts provide a relatively low cost type of portfolio insurance. In this strategy traders buy one put contract for each 100 shares of the stock that they hold.
There are many strategies in the bullish category, these include the bull call spread, bull put spread, call back spread as well as the naked put.
Neutral Options Trading strategies
In the neutral stock option trading strategies there is a coterie of strategies as well. Reversal, Conversion, Collar, Butterfly, Condor, Long Straddle, Put Ratio Spread and Calendar Spread are the mainstream neutral option trading strategies. These quasi-exotic strategies are a great way of gaining profits and leveraging existing positions in a neutral stock market climate.
Bearish Options Trading strategies
The stock market is volatile. One time it can be bullish, then neutral or bearish. As a stock options trader, you need to be equipped with bearish stock options trading strategies to complete your trading armor. The common strategies here are Long Put, Naked Put, Put Back Spread, Bear Call Spread and the Bear Put Spread scheme.
As you can see, the plurality of these strategies indicates that stock options trading is not rocket science. There are well established and documented ways of conducting stocks options trading thoughtfully and profitably. You can explore these strategies in detail in this resource. Stock Options Strategies.
Have you used any of these methods, feel free to share your experiences and thoughts with us by using the feedback form below! Thanks for reading through this post and if you like this post, please share it with your friends!