In last few decades, people have witnessed the highly booming economy of online trading in stocks. No more those black coat gentlemen who vowed their elite ness with their snob looks are seen on the street of the stock exchange. Internet trading has opened thousands of opportunities for the layman to invest. Also, shifting the trend from savings to investments has got a revolutionary change in the stock market.
It is to be noticed that every coin has two sides and same applies to trading online. Unlike other businesses it is risky and calculative. Hence, the mediocre in form of stock brokers and brokerage firms emerged so as to provide access to stock exchange to each investor. Common features of online trading are the speed and easy access. Also, the availability at competitive prices has also provided another opportunity to the traders.
The black side of online trading is the fear of fraudulent activities that can eat whole of the investments. Also, being online, the frauds are tough arrest. Hence, prevention is better in this case. Thereby, here are some tips that may help any trader to avoid catastrophic situations while trading online.
Do not trade with unregistered stock brokers or market intermediaries : non-registration with the stock exchange is the first sign of fraud. Any sensible service provider always follows the market rules, hence get registered with NYSE, NASDAQ or corresponding stock exchange. You may also come across some sub-brokers that may not be registered and offers extravagant services to the traders. Such people must be avoided as they induce investors to invest money at low cost and end up taking all the investments with them.
Do not leave your transaction slip with the intermediary : leaving the transaction slip with the intermediary is way too risky. Any fraudulent transaction may be added by the intermediary resulting in huge losses. Hence, avoid such mistakes.
Do not get overwhelmed by false advertisements or hyped declaration of growth of companies: companies need their share prices to rise and most of the times there are hyped performance levels discussed in the reports. Hence, do not trust blindly and invest huge amounts in the shares. The 2% rule must be followed and make sure that you integrate your investments.
Do not follow other's investment strategies : be an individual and know the type of investor you are. Imitating other investor's may prove hazardous. Plan your investments and develop individual investment strategies. However, utilising other's experience and tips proves favourable but following them blindly is dangerous. Utilise online reports and statistical data available about the companies before investing in stocks to make your own investment strategy.
Do not pay sac to any promise of guaranteed returns :