The #1 Reason to Never Use the Cheapest Online Stock Trading Site

By Keith Crovatt

Many beginning investors wrongly believe that the cheapest online stock trading sites are just as good as the more full featured stock trading sites. This usually is the beginning of a large vacuum sound happening on their wallet and portfolio. What these investors do not realize is it is not the cost of the trades or the speed of the trades that determine the long term success of their money.

The top reason beginning investors struggle or fail using the cheapest online stock trading websites is the lack of tools the professionals have access to on a minute by minute basis. What do I mean by tools? If you were not familiar with driving a new type of car, you would reach for the owners manual. It details what each part of the car does and how to best optimize your driving experience. Unfortunately, the stock market does not have one manual covering all of the basics for a beginner.

The two basic forms of analyzing stocks are what is known as technical analysis and fundamentals analysis. The technical analysis uses trending information updated constantly comparing past performance, high and low prices per period, RSI, volume metrics and many others to give you a direction for where the stock may be headed in the future. When stock prices are hitting a new high or a high that has not been seen in awhile, the tendency of the beginner is to buy more shares. The professionals are using the technical analysis to actually sell the shares and cash out. The charts show this resistance on a regular basis.

The other type of analysis is the fundamental review of the earnings of the company, the “news” both positive and negative, the products in development and many other opinions by analysts. This is the analysis most investors read in the paper and hear on the news. Using one type without the other is dangerous on your wallet.

Before you enter the world of stock trading, it is imperative you understand the risks associated with the trading and are in a position to lose all of the money should a position go against your analysis. There are several ways to monitor and control this risk but be aware it is up to you and not a broker or other sales person to take care of your money.

When deciding where you should invest your hard earned money, you should carefully list out the features of the cheapest online stock trading ports and use a spreadsheet or matrix to analyze each one. Real time price quotes, updated charting including advanced technical analysis and fundamental data for companies are a must in our fast pace trading environment. Learn what RSI can do for your skills. Volumes, MACD, EMA3 and other indicators will keep you out of trouble. Remember, just because you left school early in your life does not mean you ever stop learning. Learn these skills for a better future and a strong economic outcome.

If you are looking for more information regarding the cheapest online stock trading perils, click here for 4 articles written specifically for stock investors.

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