Almost everyone can enjoy the freedom of trading stocks on the internet. It is easy to begin. The three basic steps are:
You should open at least two brokerage accounts. Both internet stock trading accounts should be margin accounts. Margin accounts give you the ability to sell short stocks. You want the ability to short sell stocks when the trading environment warrants it. The stock market goes up as well as down and you want to be able to participate on the down moves by short selling stocks.
The reason why you need at least two internet stock trading accounts is because you need to be prepared when one of your internet stock trading accounts goes down. It is not a matter of "if" but a matter of "when" you lose access to one of your internet stock trading account.
It will happen and you want to be prepared for such a scenario. For example, you have bought some stocks in one of your internet stock trading accounts. Suddenly, your internet stock trading account goes offline and you can't access your brokerage account to trade stocks. Your account balance become vulnerable to big losses when the stocks start to nosedive. You frantically dial your broker's phone number to tell the trading desk to close out your long position. However, the phone lines at the brokerage firm are all busy because it is jam with calls from other clients who are also trying to call them at the same time. If you have another internet stock trading account, you can short sell the stocks to hedge against any further losses. If you are an aggressive trader, you can also consider short selling additional shares. You will use your internet stock trading accounts to switch from being net long to net short. If the stocks continue to fall, the profits that you made from short selling the stocks will be more than offset the losses from the initial long position.
Why would one be aggressive short seller at this time? If you are trapped long in your internet stock trading account, chances are that other traders are also trapped long in their internet stock trading account. They have not been offered any opportunity to sell and they will be sellers at a later time when their internet stock trading account comes back online. You can take advantage of that situation by switching from a net long stock position to a net short stock position. You can turn a potential damaging situation to your pocketbook into a profitable opportunity by being more prepared than other traders.
There are two additional features that you would want with your internet stock trading accounts. Make sure the brokers that you select support the following:
You want to get the fastest speed as possible for internet stock trading. Speed does matter when it comes to trading stocks over the internet. You want at least a DSL internet connection. DSL internet connection is better than cable internet connection. Cable internet providers usually advertise more bandwidth than DSL connections. However, don't be fooled by the cable internet advertisement on its message about internet speed. The cable industry has dirty tricks to fool unwary internet subscribers. Internet stock traders will be more impacted by these tricks than the average internet users.
You want to have 2 computers, one desktop and one laptop. At a minimal, the hardware specs are
I prefer Intel over AMD because Intel CPU runs cooler. However, AMD CPU can still be used for internet stock trading but you might experience some heating issues during the summer months. Heating is an issue with fast computers.
You also want a quiet computer as possible. You want to pay attention to the noise decibels of the fans in your computers. There is fan on the CPU, one to two fans for the power supply, some computer cases comes with fans on the both sides of the casing, and some graphics cards also have fans. All these fans make for a noisy computer. The hard drives also make a whining noise when they spin. Sitting in front of the computer all day and listening to all these noises in the background can detract your concentration from internet stock trading.
The desktop computer will be your everyday computer for internet stock trading. The laptop will be your backup. If the electricity goes out or weather related evacuation, you can grab your laptop and continue to manage your stock positions while you are away from your home. Also, if you are traveling for business or vacation, you can bring your laptop along and occasionally check on the stock market.
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