5 Steps to Start Trading Stocks Online


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Maybe there’s a product you use so much that friends or relatives say you should buy stock in the company. Or perhaps you received a windfall and need to take a position a sliver of it within the marketplace for fun and, if all goes well, profit.

If you’re itching to urge hands-on with some active online trading, this guide will help get you started.

1/ Decide if this is often the proper strategy for you

You might consider trading stocks if:

You’ve maxed out 401(k) matching dollars from your employer. Most 401(k) plans don’t allow participants to get individual stocks — instead, investors choose between a variety of mutual and index funds. But you’ll typically buy and trade stocks within a private pension plan . Trading within an IRA can be beneficial: Because these accounts are tax-advantaged, taxes on capital gains may be deferred or avoided completely.

You’ve contributed the annual maximums to a 401(k) and an IRA and are likely on track to meet retirement goals. You’re also willing and ready to combat more risk by stock trading. In this case, you would possibly want to open a taxable account with a web broker and trade within that account.

If you’re not yet steadily saving for retirement, you’ll want to start doing so before you start trading online. Maxing out a 401(k) and contributing what you can to an IRA is one of the most effective ways to build long-term wealth. Learn how to open an IRA.

Trading individual stock not only carries more risk, it requires more effort than investing in mutual or index funds. You need to actively watch your positions and understand whether and how to react to market moves. (Read more about the basics of buying stocks here.) This is not the kind of risk most retirement investors want to take on.

» Stock trading: How to begin and how to survive

If you’d rather stay largely hands-off in any case , then investing during a portfolio managed by a robo-advisor could be a far better fit than trading individual stocks.

2/ Get an education

Before you trade anything, learn everything you’ll about investing and therefore the markets. Mistakes can be costly.

There are tons of free educational resources that teach the way to trade through a web broker. Consider Morningstar’s Investing Classroom or one of the investing courses on Udemy.com.

Also, most stock brokers offer their own educational centers and a staff of former traders or investment advisors who can guide you. Some brokers, like TD Ameritrade, offer their clients paper trading, a simulation of trading that’s an excellent thanks to practice without money or risk involved.


3/ Select an online broker

Choose a web broker with the tools and support to match your needs. If you already have a sense of what you need, you can compare your options in our analysis of the best brokers:

You Invest by J.P.Morgan
NerdWallet rating
on You Invest by J.P.Morgan’s website

Fees and minimums:

$0 trade fees. $0 annual or inactivity fees.

No account minimum.


Up to $725 cash bonus once you open and fund a replacement account with $25,000 or more in new money.

Interactive Brokers IBKR Lite
NerdWallet rating
on Interactive Brokers’s website

Fees and minimums:

$0 trade fees. $0 annual or inactivity fees.

No account minimum.



In general, beginner traders should prioritize customer support, educational resources, and account and trade minimums. In addition, consider the web broker’s stock trading software. New traders will need a platform that’s streamlined, easy to navigate, and incorporates how-to advice and a trader community of peers to assist answer questions.

» Learn more: What to look for in a brokerage account

4/ Start researching stocks

Your account is open, and you’re ready to start investing. What’s next? Picking stocks, of course, and that’s the hairy part.

Most traders start by doing a thorough analysis of a company, looking at public information including earnings reports, financial filings and SEC reports, as well as outside research reports from professional analysts. Much of this could be provided by your broker, along side recent company news and risk ratings.

Start slowly, picking one or two stocks and investing a group amount of cash that you simply are prepared to lose. You can plow gains back to the stock — or into other companies — but don’t add extra money to the pot until you recognize what you’re doing and can put research into other companies.

» View our list: The best-performing stocks

5/ Make a plan and stick to it

Investing can be emotional, particularly for those new to the game. Losing money doesn’t feel good, and it’s easy to panic and pull out at the wrong time. It’s also easy to get swept up in the excitement of what feels like a winning stock.

That’s why it’s important to plan what proportion you would like to take a position at what price, and determine how far you’re willing to let a stock fall before you get out. Using the proper sort of trade order can assist you stay plan and avoid emotional responses. For example, stop-loss orders trigger a purchase if a stock drops to a particular price, which may minimize risk and losses. Learn more about the different types of market orders.


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