Online Investing for Dummies

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Investing money used to be a complicated process, but thanks to the Internet, now anyone can learn how to be a successful investor at just about any price point. Here are some tips on how you can use the Internet to build your own stock market portfolio.

Learn the Basics

To begin with, you need to learn the basics of investing, including the rules of the game and industry terminology. Check out websites such as Investopedia, which offers tutorials and a comprehensive financial dictionary so you can learn the jargon. Likewise, Berkshirehathaway.com offers glimpses into the working world of one of the country’s most successful investors, Warren E. Buffett. Reputable brokerage firms such as E*Trade and TD Ameritrade also offer video tutorials to novice traders.

There are two basic methods to choosing stock. The first method is fundamental analysis, which relies on the information released in business financial reports and public financial statements. The second method is technical analysis, which follows swings in stock market prices. By taking advantage of the wealth of free Internet tutorials available, you can learn how to use a combination of these two methods when buying and selling stocks.

Choose a Reputable Broker

Your online broker will be your investment partner, so you need to choose carefully. Here are some tips for choosing a reputable broker:

• Choose a well-known brokerage firm with a proven track record. If a brokerage firm has been around for a long time, then chances are that the firm is reliable and trustworthy.
• Find out everything you can about the brokerage. This means learning about their service options, investment portfolios, pricing structures and security systems. A good brokerage firm will be happy to supply you with this information.
• Be sure to read reviews and testimonials. Asking friends and colleagues for recommendations can also be helpful.

Use Free Tools for Online Investing

In addition to educational sites, the Internet offers a wealth of free tools for novice investors. For example, StockCharts.com offers up-to-date charting tools and the latest chart figures at a glance. Likewise, EarningsWhisper.com offers everything from unofficial business earnings estimates to updated tax credit tips for investors.

Practice With Investment Games

Practice makes perfect, and the best way to practice is to use the Investing Simulator Center, a simulated online investing game. By providing an authentic investment experience, the Investing Simulator Center teaches you how to use the Internet in your investment strategies so you can put your knowledge into practice without actually investing any money. Likewise, MarketWatch and Wall Street Survivor also offer realistic online stock simulators so that you can sharpen your skills before putting your money on the line.

Research Everything

The key to successful trading is to study the markets and research everything that interests you. That’s why the Internet is ideal for market investors — it provides all the tools you need for researching stocks before spending your money. If something catches your eye, be sure to research it thoroughly, because this can mean the difference between success and failure.

Don’t Rush to Judgment

It’s all too easy for inexperienced traders to make panicked decisions, especially if stock values plunge unexpectedly. Again, this is where you can use the Internet to your advantage. When prices are unstable, you can use your Internet research tools to determine why this is happening. A bit of wisdom can prevent you from making hasty decisions that will cost you in the long run.

When it comes to the stock market, the Internet is your friend. By taking advantage of all the Internet has to offer and leveraging its research capabilities to the fullest, you can build up a successful stock portfolio with just a click of the mouse.