3 Important Actions To Take Before Trading Online

When it comes to trading online, there are many different brokers and websites that specialize in helping people to trade stocks, commodities, or even currencies. This even goes above and beyond the ability of many individuals to manage their own 401(k) or Roth IRA accounts from the comfort of their own computer or home office. Technology has allowed for some amazing advances, however even with all of these opportunities it is important to take 3 major actions before you start even your very first trade online.

3 Trading Online Steps

Action #1: Do Your Homework/Research

One of the first steps you need to take is to slow down and make sure you do some serious research before committing to any specific company for trading online. The terms of an IRA account from one company to another are not the same. The cut certain Forex brokers take off each trade is not the same. While some of these differences can seem extremely small, sometimes being just a dollar or two, or a single percent, over the course of 30 or 40 years of investing that can lead to massive differences in the final amount.

The entire responsibility of using the best providers for your online trading fall squarely on your shoulders and it is always worth taking a next or week or few weeks to do your research to make absolutely sure you are only doing business with the absolute best of the best.

Action #2: Find Broker Software You Like

Online trading can be tricky even in the best of circumstances. Whether you are looking at trading stocks, speculating on commodities, or trading on the ever volatile Forex market, having the best broker software is critical to success. No matter which of these markets you’re dabbling in you want to make sure you are using an online program that is accurate, extremely fast (preferably real time), and very easy for you to read a lot of information in a single glance.

While every single person is going to have their own preference, the most important thing here is that your information is accurate and up to date and that you are absolutely comfortable with being able to use that software. If you can find a broker software that you are comfortable with, and that will definitely give you better results.

Action #3: Understand How Markets Are Different

When you are looking at trading online you also need to make sure you don’t make the mistake of thinking all markets are the same. Stock markets are the most stable by far and are driven much more by information and fundamental reports as opposed to technical chart patterns. Commodity trading requires much more knowledge of how speculation and technical chart analysis works in order to consistently profit.

The Forex market, where currency pairs are traded, is by far and away the most volatile and risky of all of the markets and should only be traded by professionals or after you have spent a great deal of time taking advantage of practice software to make sure you have it down.

In Conclusion

There’s no question that trading online has its own risks, but the opportunities are amazing and by following the 3 basic actions in this article you will be truly ready to go.

Saving Money Tip: Open Source Software

Last week, I was having a twitter discussion with one of my favorite PF Bloggers, Matt Jabs of Debt Free Adventure.  Matt’s a great blogger, and offered to put my car situation on his website, and I got valuable feedback from him and his readers.  Anyway, Matt & I share slightly similar professions (Although he has recently gotten a new job, Congrats Matt) in that we are both IT Geeks by day.  (I should probably stop talking about Matt & get to my post.

Anyway, Matt got me thinking when we were talking about a computer purchase.  At work (and I work for a very by-the-book employer) we have even begun using open-source software because it is so cost effective, and I thought it would be a great way for non IT geeks to use to lower costs when purchasing a new machine.  There are many different programs that you have been working on computers with for years, and probably just purchase because the program is good (or OK) and don’t know what else can do a similar function for a better cost.  Microsoft Office comes to mind here.

So, here are some ways you can save money on software when purchasing a computer

Open Source Software

Word Processing/Spreadsheets/Presentations

Standard Program:

Microsoft Office – To Order a new Dell PC with Microsoft Office, it costs $119.00, and is not the “professional” edition, which includes an email client, Microsoft Outlook.  For that, You’ll need to cough up $279.00.

For Microsoft Office on an Apple Machine, it costs $149.95 for the regular edition, and $399.95 for the “professional” edition

Open Source Alternative:

Open Office – Open office is a great program, and as long as I’ve used it or talked about it with friends, I’ve never heard a bad thing spoken about it.  It has spreadsheets, wordprocessing, graphics and databases.  This is more functionality than you get with the standard version of Microsoft office, and it’s free.  It also has a simple save as “*.docx” or whatever microsoft format you need.  It also has a save as “*.pdf” option.  You can download open office for free at their website, www.openoffice.org

Email:

For Cost Option – Microsoft Outlook included with Microsoft Office Professional Edition.

Open Source Alternative:

Thunderbird is the email client designed by the people who created the Mozilla Firefox Browser.  It’s got many of the same features as outlook, such as email search, easy set up, and integration with their calendar program, called Lightning Calendar.  If you think these sources are unsafe, think again.  Use of Firefox (the browser) has been gaining steadily over the years, and is probably safer at this point than Internet Explorer, the Microsoft Web browser.

Photo Editing:

Many of the photo editing software comes standard (a perfect reason for you to use it and not think about it).  Some of it is OK for the amateur photographer, but there are programs that do a much better job and are also free.

Picasa: Picasa was purchased by internet giant Google quite some time ago, and then was (as is google’s motus operandi) made free, and features were added like crazy.  It has a much more intuitive way of finding your photos, and also adds support for red-eye removal and tagging pictures with places and people in them.  You can also upload some of your photos on the internet to share so that grandma can see pictures of your new baby (or puppy), for free!

USB Jump Drive

You probably bought one of these to store files, thinking man, this is handy.  Well, if you’ve lost yours and don’t want to replace it, try….

Dropbox – Creates a folder on each of your computers and syncs the items in the folder across the dropbox folders.  Along with moving your files to computers, you can use files on the dropbox website.  If you’re interested in more, check the homepage for a short video on how to get the most out of dropbox.

For most users, these options would save you lots of money in software when purchasing a new computer.  There’s more products that will allow you to cut the cost of Microsoft Windows out, but I didnt mention them for 2 reasons:

  • It’s usually included in the cost of the computer
  • Other Operating System software (Linux, Unix) is typically for IT geeks like myself.

So, I encourage you to take some of Bakers advice and Unautomate your software choices.  The old methods work ok, but there are newer, better and free-er (is that a word) software options.  Explore them, you’ll save money and be glad you did.