FAQ for beginners
Why should you consider trading online?
Over 10 million people trade on line, and that is projected to increase to 32 million in the year 2003, with trades valued at over $1.8 TRILLION ! Why do you think you see so many TV ads for discount brokers ? Because the volume is growing leaps and bounds, and I can tell you why: because with online trading you can take control of your investments, save money in expensive broker commissions and make a higher rate of return on your money than you would otherwise. It can enable you to retire earlier in life, live a better lifestyle and gain a sense of accomplishment and satisfaction at the same time. There is nothing more thrilling than knowing that you can work within the stock market to control your future wealth.
Why do You see so many ads for brokers?
Large full service brokers make their money by commissions. It does not matter whether your stocks go up or down, they still make the same commission from you. In fact, it is to their advantage for you to trade (buy and sell) constantly, since they get paid every time you exercise a trade. And their motivation is contrary to what a beginning investor philosophy should be: learning how to recognize well managed companies, purchase their stock, hold them for 6 months, and then re-examine your positions.The rewards can be phenomenal if you take it seriously and decide to control your own personal finances through online trading. Did you know if you invested in the stock market for the last 20 years, the average rate of return on investment would be 15%. Compare that to a 6% CD or a 2% bank account. Believe it or not YOU can do much better than that with a little bit of knowledge. By taking control of your own investing, you can make 25%, 30% or even 40% per year ! Some people even make 200% or more. I live in southern California, and I can guarantee you many people in San Diego made millions of dollars on Qualcom in the last years alone. You see, the large brokers are slowly losing their advantage, since YOU are being empowered to act as your own financial manager. Online trading and discount brokerage firms allow you to: track your stocks every 15 minutes, buy IPO's (Initial Public Offerings) and even trade "after hours". Those privileges were only reserved for the big brokers in the past, but now YOU can have those advantages also.
Is it really safe for me to trade stocks over the Internet?
Security is the primary concern of all the major brokers that offer online trading. They use sophisticated encryption (scrambled code) devices and also have implemented what are called "secured servers". These are large computer networks with high levels of security, some of which are even in vaults with fingerprint recognition for entrance. In addition, password protection is required, and you must identify yourself in a number of ways to access your account information by phone. Many times your phone calls are even recorded,for your own protection. I can tell you from my own experiences, they take security very seriously and you really do not have to worry about the security of your account with online trading. You also receive what is called a transaction number each time you trade, and you can print it out and save it if any questions arise.
How much money do I need to get started?
You can open an account with some brokers for as little as $250. Many of them also offer new customer signups and will give you from $75 to $100 just for becoming their customer. If you are interested but concerned about some aspect of trading, start small and "learn the ropes" first. You can even not invest any money at all, but simply create a "dummy" selections of stocks (portfolio) and then track it for a few weeks or months. That is what I did at first. I selected some stocks, checked their price that day and pretended I invested $10,000. In that way, you become accustomed to seeing your stock prices change as well as how to make changes to your holdings. That method will also allow you to test new trading ideas and concepts. It does not matter how much you start with, the important decision you need to make is to get started today!
How much can I expect to earn?
This is not an easy question for anyone to answer. Let me give you my own personal experience. I quit my job to devote myself full time to my software company. At that time, I had a 401K with my previous employer. I had to close out that account and roll it over into my own IRA account. After using the methods I will explain later, I made over 60% return on my money. Pretty good for one year isn't it ? Well, I made 60% in my first MONTH of investing ! That annualizes to 720% per year. Quite honestly, I thought I could make 25 or 30% per year with intelligent investing. I would be very happy with that return for the rest of my life. If you follow my steps for investing, you should earn a reasonable return on your investments.
There seem to be so many brokers, how do I choose the one for me?
The last time I counted the number of brokers on the Internet, there were over 150 of them doing business online. They charge anywhere from $7 per trade to $29.95 per trade. Why do you think there is such a wide variety of pricing ? As the expression goes, in some respects, you get what you pay for. The higher prices come with additional services you may need to get started. I have identified the 10 key factors you need to consider in making your broker decision. I can help you easily make the right choice for your personal needs.
What do you have to do to get started in Online Trading?
Trying to make sense of the new stock trading revolution can be very frustrating and tedious. There is so much to learn and so many choices to make, you can suffer from information overload. You have to decide which broker to choose, which stocks will be a good investment as well as learn new terminology for the stock market. Then you have to know how to prevent yourself against fraud on the Internet, particularly when thousands of e-mails are flying through cyberspace touting the latest hot stock that promises to be another Microsoft ! Lastly, after you have an account for online trading, you need to be able to create, track and manage your portfolio. Sounds a little bit overwhelming doesn't it ? Well I have done all this work for you and I can show you how easy it is for you to do. I can save you hours of time that I have already spent in researching and evaluating different techniques. If you are considering trading online, I can make the job much easier for you. I have already taken all the time and done all the research that is necessary to choose a broker, select great investments, and set up and track a portfolio.
