Online Share Trading: Online Share Trading

Online Share Trading: Online Share Trading

Online share trading: How to get started

Niall Firth, Daily Mail
2 February 2009

The thought of buying and selling shares for the first time can be a daunting prospect. For the absolute novice, it probably conjures up all sorts of images: the hectic dealing room full of frantic bankers barking down and surrounded by flashing screens.

And of course there is the impenetrable jargon: shares are squeezy, markets are uneasy, investors are queasy. But for the cautious small-time investor, online trading is a handy and unintimidating introduction to the stock market.

There are at least 100 different online share trading websites available, each with a varying combination of pricing and trading options.

There are a number of reasons to consider investing online rather than turning to more traditional trading systems - particularly for those only intending to invest small amounts.

The first big advantage is cost. Traditional brokers usually charge a percentage fee of the overall cost of the trade - this can quickly mount up on trades that involve larger sums.

By contrast, most online trading sites charge a flat, one-off admin fee ranging from £7 to £20 per trade, while others also levy a small quarterly or annual membership fee. For example, The Share Centre charges £80 a year but then charges a flat fee of just £7.50 per trade.

Some, like Interactive Investor or Self-trade.co.uk, charge between £10-12.50 per trade while others charge an inactivity fee if you fail to make a certain number of trades a month.

When choosing an online trading site it is advisable to look not just at what they charge, but also what extra features they offer. The Share Centre allows nervous first-time users to practise with up to £15,000 of 'fantasy' money before they feel confident enough to start piling in with their own hard-earned cash.

Many provide free research and analytical tools detailing your chosen firm's recent financial history, and dispense hints and tips from top analysts. Others also issue a regular newsletter with trading tips and investing advice.

Guy Knight, of the Share Centre, says he has seen a huge increase in the number of people who are turning to online share-dealing. Its immediacy and simplicity are what makes it so appealing to new users, he adds.

But he also warns: 'Trading online can be very exciting and quick. But just because you can do a deal doesn't mean you always should.'

Buying shares online is disconcertingly simple. An online account can be set up within 15 minutes by filling out an application form and choosing a password. Your details will then often have to be verified with a bank statement within 31 days.

To buy shares in a particular company you simply search for the company you are interested in and click to buy. After entering either the number of shares you wish to purchase or the amount you intend to spend, a box pops up giving you around 15 seconds to decide whether you want to accept the price offered.

Online Share Trading

ONLINE SHARE TRADING

How do you succeed at online share trading? The truth is that many of the principles that apply to playing the online share market and winning are very similar to those you use offline. You need to really know your market and be constantly learning, you also need to be patient, develop a good system and seeing the big picture.

Learn as Much as Possible

The first step to being successful at online share trading is to spend time researching the market. Any business that you get involved in requires understanding of your market and what needs to be done in order to succeed in it, online share trading is no different, you have to invest in your education, whether this means investing time, money or both. Constantly be learning and growing and be prepared to adapt as situations change.

Develop a System of Online Share Trading

There is no ideal system that always wins, but all successful online share traders have some system that they use to determine whether to invest in certain shares or not and when to sell. You should work on creating a system that works for you and stick to it even if there are sometimes failures. The system you develop should set limits of when you will cut your losses and how much risk and loss you are prepared to accept before selling out.

Be Patient

Developing patience and learning to wait for the right deals is another step to playing the online share market to win. Don't take trades that are too risky simply because you feel you need to remain in the market at all times. Learn patience to wait for the best trades.

Learn to See the Big Picture

Online share trading is a mixture of understanding the details, as well as seeing the big picture. It is important to understand the big picture so that individual losses do not lead to you giving up when you could still see a profit from persevering.

Being successful at online share trading means that you should constantly be learning and growing and investing in your education and personal development. You should also learn to be patient and see the big picture so that individual losses do not stop you making a long term profit and so that you only accept the best trades. Develop a system that determines when you buy and sell and be disciplined in keeping to this system.

Richard Greenwood is Author of the Ebook Finance Overhaul which aims to show people how they can change the way they work, earn & spend using online businesses and business outsourcing.