What's the Best Way to Go About Buying Stocks Online?

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Answered by: philip, An Expert in the Investing 101 Category
Buying stocks online can be tricky. Just how do you go about doing it the right way?

Have you ever received one of those emails touting a stock? You know the ones I’m talking about, the ones that claim you can double your money in just one day, one hour, even ten minutes. Are these claims too good to be true? Is this a scam?

Well, the answer is yes, and no. Buying stocks online can be tricky business. The first thing you want to do is subscribe to as many of these as possible. Get a separate hotmail or gmail account so you don’t clog your regular box, then start tracking all these stock promoters. What I’ve found over the years is that out of say a hundred of them, there are about five who really do get their stocks to trade. You need to pinpoint the ones who really do what they say, then you can just trash the rest.

So now you’re following only 5 stocks, not a hundred. The next thing you need to do is to actually watch these stocks in the morning when they start trading. It’s not good enough to come back at the end of the day and just see the trading data. Let me tell you why.

You may come home from work in the evening and see that that stock they were touting traded a million shares and doubled in price as early as ten minutes into trading. On the surface, it looks like a winner. But remember this, buying stocks online is a tricky business, and you have to know how to look for the tricks.

One of the stock promoter’s favorite tricks is to have the stock start trading before the market even opens. What looks to you like what might have been a great investment opportunity in retrospect really was no opportunity at all. You must watch it in real time. What you will often see is that the stock doubled before the market even opened, before you ever had a chance to buy in. Remember that the percentage gain they are showing you is compared to the close the previous day. So if this is the case, who cares if it went up a hundred or even a thousand percent? You never had a chance to buy in anyway. Watching it in real time now shows you this, this thing you could not see in retrospect.

There are however just a handful of stock promoters who really deliver. I have been following these stocks for years and make a nice supplemental income from them. Another key however is to just not be too greedy. 100% gain in one day, in ten minutes? Come on. If that’s not greedy, I don’t know what is. How about a 10% profit? 10% profit three times a week is pretty darn good.

The last thing to remember when buying stocks online is to always act, not react. Set your goals and never stray, no matter what. Always go with your head, not your gut. So if you set your limit at a 10% profit, no matter what, stick with it. Adhere to these rules and you can’t go wrong. After all, even at a casino, somebody’s got to win, and it’s usually the players who are listening to their heads, not their hearts.

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