What to Look for When you’re Trading Stocks Online

What to Look for When you're Trading Stocks Online

Thinking of getting started with trading online? Good for you! Online trading can be a fantastic way to build out your investment portfolio and supplement your income. Though you may not make a lot of money when you first get started, the more you learn about the marketplace and how to make the most of your money, the easier it will be for you to take advantage of successful trading positions for your long-term growth. Of course, everyone needs to start somewhere, and with thousands of stocks available to choose from online, it can be difficult to determine where you should launch your trading strategy. The good news is that you don’t have to be a financial expert to take advantage of the online trading world, you only need to look for three qualities.

Volatility

One of the first things you should look for in your stocks – particularly when you’re day trading, is volatility. Every stock has a different level of volatility, and this refers to how likely it is that the price of the stock will go up or down during the time that you’re holding it. As you begin to develop your trading style, you’ll notice how comfortable you feel with certain levels of volatility. Buying penny stocks can be some of the more riskier bets on the market, but the payoffs are also more rewarding. Some traders find that rapid changes in stock prices are a great way to make some money fast – but it can be hard to keep track of a stock that moves too quickly. Stick to something you can reasonably manage.

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Volume

Another thing that any great day trader needs from a good stock is adequate volume. The higher the volume in your trade, the easier it will be to exit and enter positions according to your needs, without “slippage.” For those who are new to the trading world, the term “slippage” refers to when your stop loss occurs at a different price to what you expected. Most day traders look for high volume stocks with at least several million shares to purchase. You can consider using a stock screener to help you determine which of your stock options have the right volume for your needs. A basic rule of thumb to remember is that the more volume your stock has, the easier it will be for you to get out of a trade that isn’t going the way you had hoped.

Range or Trend

Finally, the range or trend is another major component that you need to consider when you’re making the most out of your day trades. Some day traders focus specifically on range trading, while others concentrate on trend trading. A stock screener will help you to isolate specific stocks in ranges or trends, so you have a list of specific businesses that suit your needs accordingly. Ranges or trends indicate whether your stocks will move sideways, or up and down in value when you’re taking on new market positions. The option that you choose will depend on the style of trading that you feel most comfortable with, and how much risk you’re happy to take with your trading sessions.

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