A reader of InvestmentTotal.com asked this question. So, as usual, after I responded to the reader’s queries, I will write it in this personal finance blog.
Is Online Stock Trading Safe and Profitable?
Here’s my response: “Any investment are accompanied by risks. The risk will only lessen if the investor knows what he is doing. In your case, as a online stock trader, the risk are the same as an ordinary stock market investor.
Therefore, you have to find out the risks engaged in stock market investing. In, addition to those types of risks, choosing the best online stock trading sites is also risky.
It is because other companies might not be legitimate or not licensed to operate a stock brokering deal online. The best advice I can give you today, is be an investors not a trader. The investor will learn everything and makes profits in the long run while a trader only speculates and has a greater chance to lose their investment capital easily.
Risk Accompanied in Online Stock Trading
A newbie investor might searching for this, so, I will try to include the risks involved in investing in the stock market using online stock trading platform.
- Legitimacy of the Company – must be listed in the securities and exchange commission.
- Trading Platform System – make sure the trading platform you are willing to use are proven, tested and updated.
- Reliable Transaction – when funding your online stock broker account. Make sure it is easy to fund with it and the system or the stock broker itself can give you satisfaction. You don’t want to deposit money in the bank or via credit card just to fund your online stock broker account but when you log in to your account, you don’t even see where your funds are.
Aside from funding your account, make sure it is easy to redeem your funds. Example, when you decided to sell all your stocks and want to redeem your funds, what options your online stock broker can give you about redeeming your funds. Is it via bank savings account, via mailing address, via check or over the counter in their office.
Tips & Warnings
Some tips in online stock trading basic guide. Before you start using a stock brokerage company online trading platform, make sure you studied the system carefully. Study how can you fund your account, how can you buy and sell stocks and how can you redeem your funds.
You must also understand the terms and conditions, agreements in using a trading platform. Make sure you only create an account with the legitimate stock trading platform. To know whether the company is legitimate, just search the company profile if it was listed in the securities and exchange commission or other important organizations that regulates online stock trading activities.
What do you think? Is online stock trading safe and profitable? Share your opinion using the comment box. Happy investing.