Trading Stocks Online


Trading Stocks Online By www.ProfitableTradingTips.com What are the advantages and disadvantages
of trading stocks online? Online stock trading comes in two forms. One is day trading in
which stock traders open and close stock positions during a single market session. The other is simply the process of executing
buy and sell orders online through an account with an online stock broker. Electronic trading,
another name of trading stocks online, revolutionized the world of trading stocks. Rather than having to through a stock broker
to place orders to buy or sell stocks an investor or trader is able to place orders directly
via the internet. Profitably trading stocks online requires
the same skills in and attention to both fundamental and technical analysis of stocks as when a
trader placed orders through a broker. The obvious first advantage to trading stocks
online is the savings one gains by going through online discount stock brokers. The second
advantage of online trading is that by operating via the internet traders gain access to up
to the minute and even up to the second pricing information as well as technical analysis. Technical analysis software included in a
computerized trade station allows traders to analyze stock price patterns and to anticipate
price trends and price reversal. For example, online traders may be following an upward
trending stock. They we see an emerging head and shoulders
charting pattern and be able to anticipate a downward reversal of the stock in question.
By working from a trade station the trader works with real time data and can profit from
small and short term fluctuations in the market. However, day traders can also cash in on big
market movements because they are at their trade station when stock prices change and
are not hearing about what happened on the evening news reading about what happened in
the stock market news the next day. If things do not go well just how do trade
fail in trading stocks online? Trades fail for the same reason they always have, especially
in volatile stock trading. Traders do not do sufficient basic and fundamental
research into the stocks that they are trading. Or traders do not learn the skillsets necessary
for profitable technical trading. When trading stocks online, for example, traders should
also set stops. These are essentially limit orders. The trader purchases stock XYZ for $100 a
share, expecting a price increase. He will immediately enter a sell order for $98 a share.
If the price drops he loses $2 a share, even if the bottom falls out and the stock falls
to $80 a share. Assuming that his fundamental and technical
analysis was correct the stock price of XYZ will move up. As it does the individual trading
stocks online will do two things. First, he will raise his stop loss price. This trailing stop will go up with the rise
in stock price and will guarantee the trader a profit even if the market corrects and wipes
out all of the gains of the day. The second thing that the trader will do with a rising
stock is to decide when to take his profit. No stock goes up forever. By making a rational choice as to when to
take a profit a person trading stocks online can often make a better profit than if he
let the market correct down to his trailing stop. For more insights and useful information regarding
stock, options, commodities, and futures trading visit www.ProfitableTradingTips.com.

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