How To Develop An Online Share Trading System
To develop an online share trading system, the first thing that you are going to need if you do not already have one is a computer. Learning how to develop an online share trading system can become a very painful and costly process if the two critical steps are skipped: Securing adequate capital and creating a business plan.
Capital
Not beginning their share trading career with enough money is the biggest mistake new traders make; just like small businesses in general that are just starting up.
Business Plan
Failure to prepare a business plan and stick to it ranks a close second to undercapitalization as the biggest reason new, inexperienced stock traders go bust so quickly. Well prepared and thoroughly thought out, your business plan is actually going to be your online share trading system. The strategy of the plan should be implemented before the first share is traded.
Trading System
An online share trading system developed by you will have certain parameters built into it like maximum price per share, maximum number of shares, and percent of holding limits.
What To Trade In
Although it is possible to trade in promissory notes, a majority of people trade common stocks. There are four main types of stocks to choose from to trade in. Many people will choose to trade in all four kinds as to diversify their portfolio.
(1) Blue Chip - These are shares of large companies that have a stock price history of profit and growth, annual return in excess of four billion dollars, significant capitalization efforts, and a stable record of paying dividends. These giants of industry include the likes of Nike, Intel, Microsoft, and Nokia.
(2) Growth Stocks - These companies put a high priority on trying to grow very quickly. To accomplish this objective, their management teams pursue a policy of reinvestment of revenue into research, development, and capitalization of the company's assets. These companies rarely or never pay dividends.
(3) Income Stocks - These companies have earnings that are high and stable and they frequently pay excellent dividends to their shareholders.
(4) Defensive Stocks - Under the most severe financial strains, these stocks are very likely to remain stable because these companies deal in products whose demand remains stable. Food, oil, and power companies are just a few examples.
The best advice that I ever received on how to develop an online share trading system was to take your time, be disciplined, do your homework, and use a lot of independent thinking.
Now you should be ready to develop an online share trading system of your own.
