Candlestick Trading Blog

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There are a couple of important steps that every investor must take when buying shares. The stock market is a great place to make money however investors must be aware of the risks and have the knowledge to trade wisely. In today's article we explore two steps that every investor must take before investing in the stock market. 

The first step every investor must do is to select and sign up with an online broker. There are so many to choose from that it can be overwhelming but you must take the time to research. You can opt to go with a full-service broker, but most online stock traders opt to utilize the services of online broker or online discount broker. Online brokers and discount brokers simply execute your trades while full-service brokers provide trading advice in addition to executing trades for you. The idea when buying shares and when looking for an online broker, is to find one with cheaper rates including transactions fees and maintenance fees. You also must look for one that does not charge any account keeping fees and does not charge any inactivity fees if you don't trade frequently. In addition to researching brokerage firm fees, investors must also take advantage of free demos to get a feel for the user interface of the online brokerage site. Ensure that the look and feel complement your trading style.

Once you have chosen an online broker now you must learn how to execute your trades! When placing trades you will be asked specific information each time. You will be asked of course for the stock symbol and the quantity of the number of shares that you want to buy. You will also be asked for the order type which is either a 'market order' or an 'at limit order'. When trading shares, a 'market order' means that you are buying shares at the current market price. An 'at limit order' means that you set a limit for the price at which you will buy the share. This is used in order to reduce exposure to large swings in the stock market. The last piece of information you should be asked for is the expiration. The expiration is the date that you want the trade to expire. Make sure that you don't leave the expiration for too long because you may forget about the trade and accidentally buy the shares!

There is so much more that is important to learn about when buying stocks and shares. Continue to learn how the stock market works and don't start trading until you are ready. Practice online paper trading as well so that you have an understanding of what you are doing before you begin to trade with real money.

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