by Tianna » 28 Oct 2012, 10:38
To trade stocks online you need to open an account with an online broker. There are many options: Scottrade, Charles Schwabb, E-Trade, TD Ameritrade, and so on. These all have their different characteristics. For example, Scottrade provides little research and advice but it is very inexpensive ($7 per trade). Also, before you start investing, since you said you've never done this before, I would recommend you read some books on investing such as "RealMoney" by Jim Cramer, "The Little Book that Beats the Market" by Joel Greenblatt, and others. Each of these books promotes a different investing style. Read them and read about them to determine which investing style you will adopt. Once you've done that you can start researching your investments. If you don't feel confident in your ability to wisely choose stocks on your own then I would recommend that you choose a broker that provides a lot of services and advice. A few tips that will help you when you get started.
1) Before you enter any position (buying a stock) be sure that your reasons for buying the stock are sound. A good way to make sure you are buying with good reason and not just on a whim is to explain your to another person why the purchase makes sense. Often things make a lot of sense in our heads but less so when we have to explain it to others. If you can't explain it to others, don't make the purchase.
2) Stay disciplined. The stock market can be intoxicating, and intoxication can lead to bad judgments. For example, if you own a stock that has gone up by 50% you may be reluctant to sell it because the idea of it going higher is just so appealing. If your discipline says that you will sell every stock once it goes up 50%, though, you must sell. Not being disciplined is a recipe for disaster. To avoid this problem you should determine target prices for your stocks, and once they reach the target price you should sell.