It was difficult to trade in stocks. Download an app, it’s completely free and you can start trading. After Charles Schwab Corp., a giant brokerage firm eliminated fees in late 2019, the entire industry created easy access to the stock market, with free trades for investors. The pandemic hit and during lockdown, people with extra cash from government stimulus, went to online trading platforms like TD Ameritrade, Schwab, Robinhood, and E*Trade. Millions of investors opened trading accounts at brokerages, and investments shot through the roof, as under:
20% of stock trades are made by retail investors. 50% of Robinhood’s new customers in 2021 are first-time investors. 75% of all options trades in July expired below two weeks: a record as shorter-dated trades are by retail investors. Before you know it, your inner investor will start guiding you.
What Does Matter
Whether it is investing democratization or downright dangerous, retail investors matter in the stock market today, influencing stock prices. Investing initially in airline and cruise line shares, they ventured into companies in bankruptcy and are now trading in the options market! With savings accounts paying out zilch and people have extra time, working from home, amateur investors having a flair for stock investments are dominating the stock market. New investors flooding the brokerage and trading apps, are rapidly influencing markets, especially options. The Robinhood app has drawn the ire of regulators and finance professionals, who worry about the platform gamifying trading, drawing users to trades with leverage /complicated strategies that enhance taking risks. With a brokerage account, adequate research and learning the jargon, transfer funds into a trading account and you start with the best-performing stocks.
- SELECT A STOCKBROKER
For easy stocks purchase, select an online stockbroker, open and fund your trading account similar to opening a bank account and start buying stocks. You can buy stock from full-service stockbrokers or directly from companies.
- RESEARCH THOROUGHLY
Your money vanishes if you don’t do necessary research before investing. Channel your inner consumer to identify winners like medicines and technology. As part of the selection process, predict the stocks that perform over time.
- ON SHARE VOLUMEs
There’s no need to pick up a huge number of stocks initially as experts recommend extremely small investments. Even one stock is adequate. As you familiarize yourself with market tools, trends and systems, keep building your portfolio.
- DECIDE YOUR ORDER TYPE
Once you’ve got your stock, you need to decide what your order type will be. Your choices are limited to either Market Order, in which the stocks would automatically sell at the best market price, without setting a Limit Order or price parameters, in which you assign a set price for your stock at which the trade will be executed. Both these order types come with their own pros and cons, and it is better to develop a better understanding before you finally choose.
- OPTIMIZE YOUR PORTFOLIO
Having taken the plunge, life is replete with rough patches. None can guarantee only gains for stocks, as market-forces operate. Always search to better your portfolio, studying possible risks and never forget to diversify!
The investment world has much to offer, if you take what you can and never stop growing. Review mutual funds, get your IRA, and always aim at a better future.