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Online brokerages offer independence, low fees

I would like to talk about investing in the market and more specifically share some thoughts about using discount brokerage companies available primarily online.

Like most investors, I hold my portfolio with an established broker at a reputable firm. About two years ago I decided to open a self-managed trading account with one of the discount online brokerages owned by the bank.

We often hear that we need the advice of a professional, that we should leave it to the experts. In some respects this is true, but there is so much information available online regarding stocks that with some concentrated effort, we can become more educated and take more of our investment decisions into our own hands.

One of the advantages online brokerages offer are extremely low fees on transactions, generally between $6.99 and $9.99 per trade. They also offer different platforms for a monthly fee whereby you can have access to accelerated information. And there is full access to option trading and bonds. One of the most important criteria in trading online is to set up very strict parameters of when to buy and when to sell. Educate yourself and implement strategies that appeal to you. You are responsible for all decisions that you make. However, the experience can be very rewarding.

If you are looking at setting up an account shop between financial institutions, some will offer promotions such as free trades. Start with a small sum. Many people will practice or set up mock portfolios prior to making their first trade. Research the market well. If your strategy is to trade shares, study and pick companies that have some volatility and volume. Get to know a few of these companies intimately. Examine their trading patterns and make sure you understand all the key ratios. The more knowledge you possess the more likely you are to succeed. It is a wonderful way for retirees to self educate and understand the challenges of the market.

Do not forget to keep track of your gains and losses and report them annually in your tax return.



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