In the past, if you wanted to trade stocks you had to use a licensed stock broker to handle the buy and sell order for you. There were always significant costs associated with the transaction, sometimes upwards of $50. Newer investors who did not have a lot of up-front cash would be limited to just a couple of trades per month before of this cost. If you had big dreams of your investment strategies, they would take longer to achieve because of the higher cost associated with buying and selling. This is why free online stock trading has become a new favorite past time among even amateur stock traders.
When the internet came into existence, a lot of businesses dramatically changed. One of these businesses was certainly the stock trading industry. Now that the internet has opened a whole new world for stock traders, no longer do you have to rely on a stock broker. By using free online stock trading sites, investors save a ton of money and they can go online 24 hours per day to access Wall Street and their account information. In fact, you can make your trades at any time of the day or night.
Now, if your stock broker is on vacation or at a training event, you do not have to wait for him to get back home and have time to call you back. Instead, you can get online 365 days out of the year, 24 hours a day and make your trades. If you decide, after seeing something interesting on a financial TV show, that you need to make a trade at 2am then you are able to get right online and do it. Your trades are done instantaneously as soon as you click your mouse. Instead of having to wait for your stock broker to have time for you on his long list of things to do, you simply click a button and your trade is completed within a few seconds.
Some of these free online stock trading websites offer a certain number of free trades each month before charging for anything. Unless you are already a big time trader or have a lot of money you need to invest, you will be just fine. Once you get over a certain amount, there may be a small fee involved for each trade for that month. However, it is still a lot better than paying a stock broker a fee for each trade you make.
These websites also tend to provide a lot of training opportunities for new and even experienced investors. You can research and learn a lot of valuable tips about stock trading, as well as get investment advice. You might find research tools that can even help you to make good decisions based on facts about the stock you are thinking of buying. After all, it only helps these sites when you do well and make money because you will then come back to make more trades later!
The Difference Between Paid and Free Online Stock Trading Services
Once we get used to paying for something-like trading stocks- it makes us wonder what we are going to lose by using a free option. This works the same way with almost anything that you may have gotten used to paying for. It works the other way around as well. Is there something you have always gotten for free (like e-mail) and have the choice of paying for it? Now the question is, what extra benefits am I receiving.
Believe it or not, with a free service you are not losing very much. Many times the free service is under a few conditions, a minimum account balance, a minimum or maximum number of trades every month. Or a monthly fee to offset trading costs. For example, if you are making 100 $10 trades, a $50 monthly fee with ‘free trades’ is a good deal. The point is, it exists but look into the fine print. You aren’t necessarily losing anything and you aren’t necessarily being scammed, but look into the conditions which need to be met in order to receive your free trades.
Usually in these different levels of accounts (free, paid, pay per trade, flat fee, etc) there may be a difference in the amount of information the site provides you regarding the stocks. This extra information is usually not needed, it can be found elsewhere, but can be a nice bonus, or may be packaged more conveniently for you than to have to look everywhere for it. You may get to be on a bonus newsletter of some sort as well. Usually higher paying, or higher balanced customers get preferential treatment of some way. But don’t let them fool you, if you want the free account, you do not need those extras to make your trades, just do your due diligence with other sites, books, and your own strategy.
You don’t need the perks, find your strategy by playing with free online stock trading sites and follow your strategy, do not try anything you haven’t tested, no matter what some guru, expert, pro millionaire says. Just because it worked for them doesn’t mean it will work for you. Test before doing anything, don’t worry about missing out on anything, you will find your own winners.
As you can see, most of the differences are cosmetic, informational, or numeric limitations. If you only do several trades a month you will need a much different plan that someone who does hundreds. Look into all of the plans and figure out which suits you best, it may very well end up being cheaper to get a paid plan than a free one. Do your research!
Practice Trading Stocks With Free Online Stock Trading
Trading stocks can be scary. In essence, it feels like betting, you are paying a certain amount of money for a ’stock’ which will either become worth more or less. In a worst case scenario, it becomes worthless and you have lost all of the money. In a best case scenario, the stock triples and you can sell it with a profit. But how can you tell when the stock will do either?
There are many different theories on this, but testing for yourself is the best way to find out. Do not test with your own money unless you are loaded and willing to lose money. Test on a free online stock trading site. These sites allow you to ‘purchase’ stocks with fake money and track them for you as they are doing in real life. Test out some of your own theories and see how they work. If you make millions in the game, then try it a bit in real life.
Don’t start out with tons of money, just $50-$1000 whatever you can afford. You might surprise yourself with your picks and earnings. But make sure it is money you can lose, because you are new at this and could possibly make a mistake.
This can be a fun and rewarding way to learn about using the stock market. Many of the free online stock trading sites have competitions where you can win prizes or money by making the most amount of money over a certain period of time.
You can learn from your peers. Many of these sites have social capabilities where you can see what your peers are buying and selling. This can help reassure your choices, or make you question them. Find someone who is doing very well and follow them, see what choices they make and why. Don’t copy them, but review their strategy and see how it might fit in with yours.
Using these free online stock trading sites can help you clearly define your market strategy and allow you to enter the real market confident and ready. You know that you may lose money, but you are prepared for it. You understand loss and gain, you need to understand important stock trading concepts prior to buying for real such as buy and hold, selling at certain percentage gains, dollar cost averaging, etc. Make sure that you have seen all of these terms being used and understand their use and their meanings. Become familiar with all of the basic stock market lingo and theory before touching a stock. Beware of penny stocks too. These can be fun to play with on the free online stock trading sites, but I would not touch them with real money until you were experienced with a few years of trading and making money.
Remember, you don’t need to be a millionaire day trader to make money in stocks. Buy and hold is a wonderful strategy that makes many people rich over time, play with this and the other theories, perfect it and then make some real money!