Trading stocks is a very easy way of making some extra money. Maybe you want to earn more for a vacation, new clothes, or maybe you even aim for a second income. Apart from the money you invest, the game requires you to pay some fees as well. All brokers and trading agencies involved in the process will ask for some money from you in return for their services. This is a common practice, which is why all investors are certain it’s the only way. They are wrong. There are certain platforms and apps that allow you to trade without paying any fees. Here is a short guide on how to trade stocks and make the best out of them.
Learn How to Trade Stocks – the Basics
If you are new at trading stocks, you are required to know a few basics on the trade before you get started, such as these:
- The easiest way of trading stocks is to get a broker. This means finding a specialist who will do all the trading for you, leaving you free to get on with your daily activities. However, this person needs to be paid. Usually, they can either ask for a commission before you start or take some percentage out of your winnings.
- If you want to play on your own, you have to find a website that specializes in trading stocks. Being your broker means you will have a lot more freedom and control over your trading activity. Apart from that, you will be saving up on the money you would have otherwise paid your broker.
- A trick of the trade is using market orders. When you buy or sell different stocks, you can do that with a market order. This practice means that your stocks will be traded at the best possible price at a certain moment in time. However, it’s a tricky practice, especially for beginners. It can take some time for the sale to happen, and if the market is shifting quickly, you might end up with a different price than what you originally saw.
- Stop market orders are the answer to the impediment above. The practice is the same. The only difference is that you add a condition to your trade, which says that your stock has to be sold when it gets to a certain price. Beginners will find this tip useful, especially in falling markets.
- Another great tip is to store your money between the trades you make. For this you need to be working with a brokerage company, that will put an account at your disposal. Of course, you will have to pay the company some small fee for keeping your money safe.
- Doing some research and getting to know the market. This is a very important thing all beginners must know. Try to read every piece of material you can and never stop learning because the market never stops shifting. The more you know, the better you’ll be at trading stocks. This is the key. Also, knowledge will protect you against fraudulent offers. You’ll notice that the Internet is full of them.
How to Trade Stocks Online for Free
You might have noticed that some of the advice above refer to services that require you to pay different amounts of money. However, learning how to trade stocks for free will rid you of this nuisance.
In the past few years, some startups appeared that allow for free of commission trading. Here are the most famous:
- RobinHood is considered to be the best. Its portfolio consists of over 5000 stocks and ETFs, and they do indeed have zero commission.
- Loyal3 comes with free trades as well, but only for a selection of stocks.
There is a downside to these two apps, which you should know about. They do not allow access to mutual funds, and they don’t come with retirement accounts.
- USAA completely changes the game as it doesn’t ask for a minimum initial deposit so that you can start trading. Asking for a deposit is a traditional requirement of the market. This is what makes USAA so special among traders.
- Scottrade doesn’t offer free trades. However, before you start saying anything, you should know that you can earn free trades with them as long as you recommend them to your friends, and that’s still better than having to pay fees.
- Ameritrade, OptionsHouse, TradeKing, Firstrade, and ETrade are all in the same category because, while they do allow free trades for new investors, their deals vary. The same goes for the amount you need to invest to qualify for free trade. There is one thing you need to remember here: this type of situation usually refers only to new accounts. Therefore, should you wish to close your existing account and open a new one to take advantage of the deal, discuss with your broker. He will tell you all about account closure and fees required for transferring. The trick of the trade – always read the fine print when it comes to this. There might be some limitations you don’t know about.
- Merrill Edge, Charles Schwab, and Vanguard are for investors playing in the big league. These particular brokerage firms offer great deals to people with big accounts. The added value of these offers is that, unlike others, they are not a one-time thing. They tend to be permanent.
Charles Schwab and Ameritrade, out of all the companies we mentioned are the best Internet brokers when it comes to ETF trading. This is another trick of the trade. Beginners should pay attention to it because it’s always easier to find deals for free commission trades on ETFs than stocks.
How to Trade Penny Stocks
If you know about penny stocks and have decided to trade on them, your reason is simple enough – they are cheap and promise big returns. However, things in trading are never as simple as they seem, so here are a few tips and tricks on penny stock trading.
- Always read the disclaimers. This means avoiding the tips you get via email. Veterans of the trade say no one sends them to you because they want to give you free money. The disclaimers will show you the real purpose you’re getting the tip.
- Sell as fast as you can. With penny stocks, the profit is some 20% or 30% in a matter of days. If so, sell as fast as you can. Never linger and never get greedy.
- Don’t get romanced by a certain stock. They will always try to win you over with their amazing stories. Do your research and decide for yourself if it’s worth it or not.
Try to ignore success stories. There are many penny stock trading stories running amok on the internet about people who have successfully traded. Sadly, they are not true, as experts say. They’re probably written to lure you in. This is yet another situation where doing your homework truly helps.
Tips and Tricks on How to Trade Stock Options
- Choose a trading style that matches your lifestyle. In order to be successful at trading, you should keep an eye on the market constantly. So, make sure you have the time to do that. At home, at work, or after hours, make sure you stay on top of things.
- Know when to sell your stocks. Most people focus on buying and tend to neglect selling. You shouldn’t do that. Plan ahead and pick exactly the perfect time to sell and convert your shares into real money.
- Trading education is very important. Read about current market and exchange events every day. Apart from that, begin your education at the bottom, with trading guides for dummies. They will teach you how to trade safely. There are numerous online guides, in PDF format, perfect for on-screen reading. Read the material published by Jesse Livermore.
- Team up with experienced online traders. Doing it on your own works when you’re somewhat experienced. But when you don’t have much experience, getting your head into the game is quite challenging. So, associate with old traders who can teach you what to do.
- Think about swinging trades with options. When you swing, you can reduce your market risks, lower your costs and diversify your options.
- Choose the right assets. This means thinking about the ones that could guarantee you some profit, no matter the cost, such as oil or gold.
The most important thing to remember when it comes to trading is never to treat it like it’s a lottery. There are science and research behind it, and the more you understand, the better you do. Trading stocks for free is one of the advantages that come with knowing the market as well as the game. As stated, most people don’t even know this is an option. But when you wrap your head around trading, all its secrets will be revealed.