A lot of people that are interested in learning how to trade stocks online are afraid of losing money, whether it’s because they don’t know what they’re doing or because they simply don’t have the funds to make those sorts of mistakes. Thankfully, there are ways you can keep yourself safe while trading stocks on your own, either through investing with an online broker or by joining an online community and asking questions as you learn. Here are some tips on how to trade safely online.
Research Your Broker
Choosing a good broker is essential for your financial security as a trader. You don’t want to put your money in an account that isn’t well regulated or licensed, but at the same time you also don’t want to put it in one that charges too much or doesn’t offer enough investment options. You also should know how the brokerage firm processes withdrawal requests and what are your withdrawal options.
For example, you need to know how to withdraw money from eToro and where they will transfer the money if you’re going to sign-up with this broker. It could be possible that they may have policies which you’re not in agreement with so it’s important to be aware of these. The best way to make sure you get a good deal is to take your time and do thorough research. Research as many different brokers as possible and look up their assets under management, cost of trades, compliance record, and overall reputation before choosing one—otherwise you may end up picking someone who steals from you rather than protects you.
Avoid Becoming a Victim
Be careful with your money, and never make a deposit or withdraw any funds that you’re not prepared to lose. A broker will usually explain how margin trading works; however, don’t sign anything until you have read all terms and conditions thoroughly and understand what you’re agreeing to.
If you plan on regularly investing in stocks, it’s important to choose a secure broker who is licensed and regulated by FINRA. You can find information about a particular firm’s licensing status at FINRA BrokerCheck. The SEC also provides general information on protecting yourself from investment fraud through their Investor Bulletin website.
Work with Brokers that Provide Good Customer Service
Choosing a broker is one of your first and most important decisions when opening an online trading account. Brokers can offer a wide range of services, from platforms to access foreign markets to research tools and more. But what you’re really paying for is customer service, so make sure your chosen broker offers a personal experience that allows you to easily trade online; otherwise, you’ll likely end up spending too much time searching for information instead of making trades.
If a company offers online chat with brokers or maintains an active presence on social media, that’s a good sign they can provide quality service—both through their own resources and by working closely with third-party providers like banks and regulators.
Secure your Devices
It’s important to take security seriously when you’re doing any type of online trading, so it’s essential that you do everything in your power to protect yourself. First and foremost, if you plan on trading using a mobile device or public computer, always make sure that your personal information is protected by using a password-protected VPN—this way, even if someone were to access your information remotely, they wouldn’t be able to read anything in real time. It’s also important that your devices are protected from malware and viruses; use reputable software and keep it up-to-date so you can rest easy when accessing sensitive information online.
Stay Away from Scams
Trading online is a great way to expand your financial repertoire, but it’s important to use caution. A common scam involves brokers trying to collect upfront fees from you for guaranteed gains.
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Needless to say, legitimate stock trading sites don’t work like that. They charge a small flat fee per trade or require you to pay a small percentage of your profits on each trade. The good news is there are plenty of legitimate ways to trade online—and several discount services that can help you get started without any initial investment at all!
Know the Risks
No matter how much research you do and how careful you are, there’s always a chance that your money will be lost in cyberspace. That’s just one of many possible pitfalls of online trading. The best way to avoid falling prey to these problems is by knowing what they are, which is why we’ve created a list of online trading risks.
If a risk seems particularly important to you, ask yourself: Is it worth taking? Is it worth risking my entire investment? Once answered, act accordingly. Knowing potential pitfalls ahead of time gives you more power over them than reacting later on when something goes wrong because then it may be too late.