How to Make Money Trading Online

by Contributor

Trading online, whether it be stocks or exchange traded funds, can be a great way to make money. While you must know what you are doing, the opportunity to rake in the cash is certainly there. Here's how to make money trading online.

Open an online stock trading account with the brokerage of your choice. There are plenty of discount brokers to choose from. Sharebuilder by ING, Scottrade, E-Trade, Zecco, and TD Ameritrade are all examples of potential online brokers. Some of these require a minimum dollar amount to open an account. Research are review each of the companies before making your final decision.

Fund your newly opened brokerage account with cash from your bank account. This will allow you to purchase stock in order to eventually make money. Within your online trading account home page, there should be a link that says "fund my account" or "add funds".

Research stocks or exchange traded funds to determine what you'd like to purchase. Remember that the objective in making money doing online trading is to buy low and sell high. Locate a stock or ETF that you believe will go higher and execute a purchase through your account.

Once the stock or etf that you originally purchased appreciates in value to a level that is acceptable to you, sell or trade away the security. You have now just made money trading online if you sold it at a profit! This is also called capital gains and is subject to taxes if done outside of a tax-deferred retirement account.

Tips

  • check Read and research as much as you can. It will only help you make money online.
  • check Learn as much as you can from books and people that have successfully traded online.
  • check Many stocks and etfs pay quarterly dividends to shareholders. This is another way to make money while waiting for the security to go up in value.

Warnings

  • close Investing in the stock market comes with the risk that you could lose all of your money.
  • close Be aware that most online trading accounts charge fees for selling and buying of securities.

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