Chapter 7 - Do it Yourself! Online Investing (Sneak Peak...)
In this chapter, I will start by guiding you to sites that explain how online trading works. You will even be able to try a few online trading simulations in order to get your feet wet. We will explore what type of orders you can place when trading securities online. Then, we will explore how to choose an online broker, given your particular needs and expectations. Following that, we will look at some annual surveys that rank online brokers. I will provide you with a thorough list of brokers so that you may shop around and find the best one for you. And finally, we will look at some excellent investment portals and charting services that will complement your online endeavors. But first, we need to revisit your financial goals, investment objectives and strategies.
Your Financial Goals, Investment Objectives, and Investment Strategy
Before taking the plunge into investing online, you need to revisit the financial goals and investment objectives you set for yourself in Chapter 1. If you have not yet completed them, now is a good time to do so. In addition, you should re-examine Chapter 4 to help pinpoint what your personal investment philosophy or style is. This will help you define an investment strategy that you will feel comfortable with. For instance, you may decide that buying stocks and/or ETFs for the long run is the way to go. Furthermore, you will be able to assess the level of risk you are willing to take with your investments. If you are uncertain about what your investment style and strategy consists of at this particular point in time, don’t worry, as you will feel more comfortable after you finish reading this book and getting your feet wet with your first investments. The important thing is to get started on your investments by opening an online brokerage account and buying your first securities.
How Online Trading Works
In the old days, the trading of stocks or other securities was performed in person by individuals on the trading floors of various stock exchanges. Only members with “seats” on these exchanges could swap securities. In other words, these members were investment professionals, commonly referred to as brokers, who bought and sold securities on behalf of their clients. This type of “on-the-floor” trading still takes place today. But the Internet and electronic trading networks have greatly facilitated the process and have enabled a greater number of players to trade securities. What’s more is that trades can now be quickly completed by anyone who has an online brokerage account. Furthermore, trading costs for the average investor have significantly dropped in comparison with just a few years ago...//
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© Dan Fournier, 2007, 2008