Have you heard of Online Stock Trading before? What do you know about it? Have you profited from it in any way?
In this article, my goal is to do an exposé on what Online Stock Trading is and how you can profit from it and make a lot of money from it. I’ll also be sharing various platforms, sites and apps that you can use to trade online. Are you ready for this treat? Let’s get to it real fast. First, let’s know what it is by way of definition. Before we proceed, let’s understand the root words – stock, stock market (trading) and online trading.
What is a Stock?
When a business commences, it falls under 3 categories – sole proprietorship, partnership or a corporation (Limited Liability Company). In sole proprietorship, there is a single owner, partnership has two or more owners that agree on how they want to share the ownership of their company. In a corporation, ownership is based on the amount of shares owned.
According to HowMarketWorks.com, Stock is defined as a share of ownership of a company; if you own a company’s stock, you actually own a percentage of the company itself (including its assets, like chairs, vehicles, and buildings) and a percentage of its profits. A corporation is constituted of the equity stock of its owners. A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. (Wikipedia)
When you buy stocks, you simply purchase a piece of a company’s future.
What is the Stock Market (Trading)?
When investors buy shares in a company, they become a shareholder in that company. If for any reason, they don’t want those shares again, they would go to a stockbroker to help them sell the shares. The stockbroker is a member of the stock exchange.
The stock market is the place where stocks are sold and bought. The process of buying and selling of stock is referred to as stock trading. Some people are long-term investors and wait to collect their dividends from the shares when the company declares a profit. Others are short-term investors who buy shares when the price is low and sell when it is high.
According to TheMint.org, the stock market is an everyday term we use to talk about a place where stocks and bonds are “traded” – meaning bought and sold. For many people, that is the first thing that comes to mind for investing. The goal is to buy the stock, hold it for a time, and then sell the stock for more than you paid for it.
Now that we have an idea of what stock is as well as the stock market and stock trading, let’s examine what online trading is before we dig deep into what online stock trading is.
What is Online Trading (e-trading)?
According to MarketBusinessNews.com, Online trading or e-trading is the act of purchasing and selling financial products on the Internet. The trader buys and sells using an online trading platform. Online trading may include trading in bonds, stocks (shares), futures, international currencies, cryptocurrencies, and other financial instruments. Investopedia defines online trading as the buying and selling assets through a brokerage’s internet-based proprietary trading platforms.
Online trading is simply the use of online applications and software to trade financial products. There are different products that are traded online, but in this article, we are focusing on Online Stock Trading. Let’s get right into it.
What is Online Stock Trading?
Now that we understand what stock trading and online trading are, we can proceed into what online stock trading is.
Many years ago, if an investor wanted to buy or sell a stock, he had to call a stockbroker or even send a letter. Today, that still exists, but it’s better now in the sense that with adequate knowledge on online stock trading tools and sites, an investor can trade him/herself.
Trandshare.org defines online stock trading as a model where you can enter your trades directly into your broker’s system and let their computers buy and sell for you. Trading stock online has given anyone who has an internet connection with a laptop or mobile device the opportunity to trade stock on his/her own using the online stockbroker’s platform. It is convenient and offers easy access virtually from anywhere in the world.
To start trading stocks online, you need to understand the terrain first. The first thing you need to do is to do your own research on the best online stock broker to use, you also have to research the appropriate stocks that have great prospects so that you don’t waste your money.
Some brokers specialize in beginner investors while there are those that focus on trading on a wide variety of asset types. There are also the ones that emphasize affordability. Whichever broker you settle for, it’s important to diversify your portfolio.
Now let’s have a look at the checklist in choosing the best online brokerage.
Checklist for Choosing the Best Online Brokerage
When it comes to choosing your top online stock trading sites, there are no sentiments involved, you have to go for the best that offers great platform, has good reviews, moderate fees with a good rate not necessarily the cheapest. It is important for you to compare options, their commissions’ margins, and also check their website before you open an account with them. Once you are satisfied with their system, check their minimum deposit and start trading.
According to Stockbrokers.com, below are some of the most important factors to consider when choosing your online stock trading websites even if you are a beginner.
This is very important for me because any broker that not regulated is a time-bomb that can explode anytime. It is important to check if the broker is regulated by the regulating body. In the United States (US), stock brokers are regulated by SEC and must be members of FINRA and SIPC. In Nigeria, the Securities and Exchange Commission regulates the Nigerian Stock Exchange and the stockbrokers. It’s important to find out if the Online Brokerage you want to use is regulated.
Another thing that you also need to check is the trading costs, Most brokers charge a flat rate to buy and sell. Other costs can be incurred for direct routing fees or accessing market data. Comparing this across brokers could help you make the best decision.
The other services rendered by this brokers might be worth looking into as well. Some brokers offer banking services apart from online stock trading. Some offer checking accounts, savings accounts as well as credit cards. Some also trade other assets like ETFs, mutual funds, options, futures, and forex too.
Great Trading Tools which includes Mobile Trading
You need to check if the broker you want to use has great tools which will aid stock analysis. Apart from that, also check if they are not only web-based. They should also have mobile apps that you can use to trade. You should also check the features their apps or software offers if they suit you.
This is something that you should not trade for anything. Check reviews, do your due diligence to check if the broker is secure. You should not have an issue with this if you have a broker that is regulated. Every website should have SSL encryption and the client data should be stored in secured servers. Dual-factor authentication and Touch ID are other security protocols quickly growing in popularity.
This is very critical to the success of the company. You should only use a broker that has good customer service and support structure. Everyone wants to be treated like a king, so you should ensure that if you have any issues, a prompt customer service team is behind you to help you. You can check this out in their reviews.
Examples of Online Stock Trading (Sites) Companies (Online Stock Brokers)
There are various online stock brokers in the world where you can buy stock online, you can make your choice from this list. Check out these ones and make your decision:
US Online Stock Stock Brokers
- TD Ameritrade
- Merrill Edge
- Ally Invest
- Charles Schwab
- Interactive Brokers
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- Merrill Edge
- Interactive Brokers
- Muriel Siebert
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Nigerian Online Trading Companies (Platforms)
With these online stock trading companies, you can trade stocks and make more money. Kindly visit them and begin placing your trade. Don’t forget to leave your comments below.
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