Q:

What are some tips for trading online stocks?

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Quick Answer

People who trade stocks online can limit potential losses by doing research and guarding against problems such as trades not executing, not having access to accounts and placing the wrong types of buy orders, advises the U.S. Securities and Exchange Commission. Online investors should also keep in mind that online trading is not always instantaneous and take precautions against delays.

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Full Answer

Investors who make stock trades online must fully research a stock and its risks, just as they would with traditional stock purchases, notes the U.S. Securities and Exchange Commission. Investors using a cash account for online trading must pay for a stock before they sell it, or they are in violation of Federal Reserve Board regulations. Investors who are unsure if an online stock purchase went through should call their brokers, or they risk owning no stock or making double purchases. Investors should take similar precautions after cancelling a buy order.

Due to potential problems with accessing online accounts, such as slow Internet service, online stock traders should know their other trading options, such as over the telephone, states the U.S. Securities and Exchange Commission. Online investors should also be sure to place a limit order for a stock, rather than a market order, if they wish to purchase a stock at or below a given price.

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