How to Protect Yourself When Trading Shares Online

FinanceStocks, Bond & Forex

  • Author Michale Anderson-Smith
  • Published December 1, 2010
  • Word count 323

Online stock trading has revolutionized the way commodities are being traded. Anyone can now get level 2 access to the markets which means that you can buy and sell shares from the comfort of your own home. The need for a broker to execute the trade has been replaced by the electronic equivalent.

All you need is a trading account and you can set it up in a couple of days. Most online brokers charge about $5 a trade and give you access to a vast amou7nt of resources to help you trade stocks effectively.

Although the actual process of buying and selling stocks is simple, making money is quite a different story. Losing your shirt is a lot easier than you may think. You absolutely have to protect yourself when trading online - not from a security point of view but rather from a trading point of view.

Stocks can be highly volatile and if you don't keep a close eye on how your stocks move, you can really lose a lot of money really quickly. If you are trading short term then you need to make sure you at least have the following safety measures in place.

  • Check the history of the stock

Day traders often just look at short time frames which can be dangerous. Always make sure you check a longer history of the stock to make sure you aren't in for any nasty surprises.

  • Check the news

Always check the financial news and do search on Yahoo Finance for the stock you are about to buy. Make sure there's aren't any news that might have a negative effect on the stock.

  • Stop losses

Always trade with stop losses - period. It is your number one safety measure and can make the difference between losing your shirt and surviving. Set your stop loss to what you feel comfortable losing and never leave it till the next day.

Are you looking for good stock trading courses? See my blog to read more about internet stock trading.

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