Hot Tips for Online Investors: Trading Online

Hot Tips for Online Investors: Trading Online

	Start slowly. Don't begin trading online with your entire life savings. When you feel confident, then decide whether to add more money to your online account.
	Recognize that you will likely not be linked directly to the market and that the click of your mouse will not instantly execute a trade.
	Determine whether you are receiving delayed or real-time stock quotes, and how often your account information is updated.
	Learn how to use limit, stop and market orders, and understand the risks of margin accounts (borrowing to buy stocks). A buy limit order is an instruction to buy a security only if the market price has not moved beyond a certain point. For example, if you wish to buy Xcompany.com stock for $10 or less and the stock price moves above $10, the trade will not be executed. Similarly, a sell limit order can only be executed at the limit price or higher. A stop-loss order sets a sell price for a broker. When the security's price drops below this level, it is automatically sold. If a limit order is not placed, the trade is considered to be a market order. With a market order, you won't be able to set the price at which your trade will be executed. Here's how that works: an investor places an order for Xcompany.com stock which he sees is priced at $10 per share. The stock is highly volatile, however, and when the investor's order actually reaches the market, the stock has risen to $15 a share and his trade is executed at that new price.
	Keep your investment goals in mind. Once online, many investors have a tendency to concentrate on stocks, specifically large-cap domestic stocks. Consider your time horizon and risk tolerance and the advantages of a well-balanced, diversified portfolio of investments when trading online.
	Stay well informed. If you are going to buy and sell individual stocks online, you should be aware of developments affecting companies. Don't just settle for hype about hot stocks! Go to a company's web site and download its prospectus. Check out the company's publicly available filings through the U.S. Securities and Exchange Commission's EDGAR system. Take advantage of the many other valuable services online or in your local library that allow you to research potential investment opportunities.
	Online trading is not foolproof. You could be away from your computer when the market makes a major move. Your Internet connection could be down. The online brokerage firm's server could crash due to heavy trading, unexpected software glitches or a natural calamity. Know how to contact the firm's customer assistance personnel to receive information about significant web site outages, delays and other interruptions to securities trading and account access. Be familiar with the firm's alternative trading options for times when you can't access your account online. These could include automated telephone trading, fax or calling a broker.
	If you're unsure whether an online order has actually been processed by the firm's computer system, follow the web site's instructions for confirming a trade or contact the firm for more information. Don't simply try placing your order again; you may end up buying the stock twice.
	If you have a complaint, act promptly and try to resolve the problem with the firm. If you're not satisfied with the firm's initial response, write (not via email) to the firm's compliance department and ask for a written response to your concerns. Document the situation, including the firm's responses. If your complaint is not resolved, contact us for help.