Online Stock Trading: Freedom of Trade

I remember the first time I started to trade online. It was just before the tech bubble of the late 1990's and the internet was still something new for most people. Purchasing the now forgotten company was easy, and I made a few dollars on that trade. It was so excitingly simple.

Flash forward a couple of years and I have made and lost my share of money. While still ahead of the game, I learned a few things about online stock trading. Freedom is great, but it comes at a cost. Lets have a look at the benefits and the trade offs of online stock trading:

The Benefits of Online Stock Trading

Low commissions - for most people, this is the number 1 benefit of investing online. For $9.99 or less, you can buy and sell your favorite stock. Full service brokerage fees are usually over $100. If you are an active trader, that can start to eat up your profits very quickly. For every $10 000 you invest, you have to make 2% ($200 - $100 to buy and $100 to sell) just to break even.

Quickly act on price moves - another great benefit of online stock trading is being able to quickly act on price moves. With the click of a couple of buttons, you are able to take advantage. With a full service brokerage, you'll have to call first, explain what and why you want to trade that stock and then wait to see what price you were filled it. Odds are, you may have missed the best entry point, and paid 10x the commission for that privilege.

No middle men - No justifying why you want to trade, no having to have someone suggest that a stock might be too risky. You call the shots.

Information - at your fingertips online stock trading can bring much needed and real time info that can help you when to buy and when to sell. Technical charts, real time prices and information sharing can be easily accessed online.

The Drawbacks of Online Stock Trading

No middle men - while I just listed this as a benefit, its also a drawback. The majority of my losses were from stocks that did not meet my investment plan but were simple stocks that were being pumped and hyped up. Often, you end up buying a stock that is moving higher, and end up having to sell at a loss. When you trade at a discount broker, there is no stopping you from making a mistake. With a full service brokerage, your financial planner can help filter out the bad plays from the smart ones. This advice alone can more than make up for commission fees.

Investment Plans - online stock trading doesn't automatically come with an Investment Plan. Why are you buying a stock? What is your exit plan if things don't go right? Will you use margin? Will you buy penny stocks (and if so, what percentage of your portfolio will be at risk)? A full service broker can help create an investment plan. Trading outside of your risk tolerance is one of the biggest risks your portfolio will face.

The best suggestion I can make for you is to look at a combination of both. Trade stocks online, but talk to an investment planner, develop an investment and trading plan first. While you may have to pay for his time, your trading plan will help you to avoid unnecessary risk when you on online stock trading.

investment strategies for trading penny stocks.

1source4stocks.com provides traders with online trading and investment startegies and tips. Free stock picks for subscribers to the Leading Source - http://www.1source4stocks.com

MORE RESOURCES:

Forex Expo promotes currency trading as alternative to bourse - Kuwait Times

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/0i-0fd=Rurl=http://www.kuwaittimes.net/read_news.php%3Fnewsid%3DODI5MDA4NzAzcid=0ei=lKUnSaScN5zI8AT0tekLusg=AFQjCNF727tdjOk_e_RQ0n-GStDxIwhq8Aimg src=http://news.google.com/news?imgefp=2wR1la0ZiX8Jimgurl=www.kuwaittimes.net/upload/img_pict/local9981b4.jpg width=80 height=54 alt= border=1brfont size=-2Kuwait Times/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/0-0fd=Rurl=http://www.kuwaittimes.net/read_news.php%3Fnewsid%3DODI5MDA4NzAzcid=0ei=lKUnSaScN5zI8AT0tekLusg=AFQjCNF727tdjOk_e_RQ0n-GStDxIwhq8AForex Expo promotes bcurrency trading/b as alternative to bourse/abrfont size=-1font color=#6f6f6fKuwait Times,nbsp;Kuwaitnbsp;-/font nobrNov 20, 2008/nobr/fontbrfont size=-1By Dana Khraiche, Staff writer KUWAIT: bCurrency trading/b has its ups and downs. Recently, one of Kuwait#39;s largest lenders, Gulf Bank suffered a major crisis b.../b/font/div/font/td/tr/table

Currency Trading Markets Remain Highly Correlated to Dow Jones ... - Daily FX

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/1-0fd=Rurl=http://www.dailyfx.com/story/bio1/Forex_Markets_Increasingly_Correlated1227030341561.htmlcid=1271919444ei=lKUnSaScN5zI8AT0tekLusg=AFQjCNGdydpXeuX9Q8g2JuHBSqpuOeZ2fQbCurrency Trading/b Markets Remain Highly Correlated to Dow Jones b.../b/abrfont size=-1font color=#6f6f6fDaily FX,nbsp;NYnbsp;-/font nobrNov 18, 2008/nobr/fontbrfont size=-1bCurrency trading/b markets continue very highly correlated to broader risky asset classes, as the common theme of financial market deleveraging creates strong b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/1-1fd=Rurl=http://www.dailyfx.com/story/dailyfx_reports/cross_markets_data_reaction/Forex_Markets_Increasingly_Correlated1227030341561.htmlcid=1271919444ei=lKUnSaScN5zI8AT0tekLusg=AFQjCNHavm0saPtDiWaYFnIabszqEHxaPgbCurrency Trading/b Markets Remain Highly Correlated to Dow Jones b.../b/a font size=-1 color=#6f6f6fnobrDaily FX/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1271919444hl=ennobrall 6 news articles/nobr/a/font/div/font/td/tr/table

Dollar Posts Weekly Gain as Stock Plunge Spurs Haven Demand - Bloomberg

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WSJ(11/11) Currency Trading: Bad Crop: Commodity Currencies - Alibaba News Channel

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The view from MIT#39;s business school dean - BusinessWeek

ProSignal Inc. Releases a Fully Automated Online Forex Currency ... - MarketWatch

Hedge your bets with currency trading - Telegraph.co.uk

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Movers: Citi, GM, GAP, Dell, Wal-Mart - BusinessWeek

Currency Trading Strategies from DailyFX+ Prove Strongly ... - Daily FX

Runaway FX turnover growth tamed by crisis - guardian.co.uk

Currency-Trading - Google News

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