Make Money Trading Stocks Online

Make Money Online Trading talks about making money online by trading stocks. This article will explore if day trading is a legitimate way to make money online. Please scroll down.

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Make Money Online Trading

Online Trading – is There Money to be Made?

A few years ago when the economy was booming and the stock market became everyone's personal ATM machine, it seems that anyone with a few extra bucks, a computer, a reliable internet connection, and some free time wanted a piece of the action.

And so "day trading" became the current "money making" fad. Online discount brokerage services couldn't keep up with the new accounts being opened. For a tiny $500, anyone could have the opportunity to open an account.

Discount firms already had a name for themselves, and they had envisioned their target market as intelligent, experienced traders who knew what they were doing, could make informed decisions, and did not need to pay the higher brokerage fees with other companies such as Fidelity who offered "free" trading advice along with their steep per-trade commissions.

However, once word got out about these deeply discounted brokerage firms, everyone wanted to get involved. Most of these people had no knowledge of the stock market – certainly not enough to make informed educated decisions on short term investing. And this is what day trading is all about – short term gains, not long term investments.

Oh sure, anyone could buy blue chip stocks and hold them years and years. But with day trading, the idea was to hold them for minutes, hours, maybe a few days. A quick turnover would hopefully turn a quick profit.

And so it could be. But for very very few. Many investors find out the hard way that real "day trading" accounts have severe limitations, not necessarily explained when the original account is opened.

The problem is that the SEC imposes very strict limitations on what "normal" trading is versus "day trading". Day trading has severe limitations of 6 or more transactions a week. In other words, if you make fewer than 6 trades a week, you are a "normal" trader and you are OK. However, anyone who makes more than 6 trades a week quickly learns they are in hot water! They are usually notified with a certified letter that says something to the effect, "You must place a minimum of $25,000 in your brokerage account in order to maintain your level of trading activity."

The investor then needs to call the company to ask what is going on, whereupon he is then read all the rules and regulations handed down by the SEC to online day traders. Of course, not many of these new day traders can come up with the mandatory $25,000 so their only option is to limit their trades to the prerequisite 5 or fewer trades per week.

So – what's the problem? Most people get this bad news just as they are trying to sell one particular stock – usually for a very tidy profit. And what happens instead? They can't sell for another week! Chances are when they are finally able to sell, the profit margin is gone.

For anyone who can fund their account with the $25,000 minimum, it sometimes comes as a surprise to find out the account must have this minimum all the time. This is not simply an initial deposit. This is a federally regulated minimum that must be maintained consistently, as long as you are making more than 5 trades a week. If you happen to make a few bad decisions, e.g., you lose a small fortune, you need to replenish the account pronto.

Almost everyone finds out the hard way that making money by online trading is very difficult. You're lucky if you can make anything at all. Even experienced traders find it almost impossible to know what will happen minute by minute. It's all guesswork, for everyone.

If your goal is to actually make a living trading stocks online, you'll need to have thousands and thousands of dollars to keep in your brokerage account, and be able to afford considerable losses. The old adage "it costs money to make money" certainly holds true with any type of online trading. Your success will be a mixture of experience and luck.

However, if you are truly interested in playing the stock market, work with a professional who is not on commission. Someone who can give you unbiased information – someone who is not being paid a commission by a brokerage firm. Don't rely on books, internet courses, expensive charting software, TV shows, or friends. It takes years and years in the business, a thorough knowledge of what the market is doing and intimate insider details of what each individual company is planning. This level of involvement only comes with years of experience and plenty of industry contacts.

Don't be foolish. If you can't afford to lose big, open a good old fashioned savings account. At least you won't lose anything!

Thank you to Marie Duffoo for this "Make Money Online Trading" article.

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