Trading in the stock markets is open to everyone with small money to invest, even $10-$100. The problem is that often many people are confused because they do not understand how the stock market system works, and also where to begin. The purpose of this essay is to explain simple steps to start trading in the stock markets even with little capital at your disposal.
One question, which has often been asked, is whether it is only the rich and wealthy that can invest in the stock markets? Well the obvious answer to this question is no. Often many individuals do not understand that the stock market offer opportunity for both the wealthy and the non wealthy to participate in the daily stock market trading activities.
The first step is to open a trading account with a Broker, these days there are many discount brokers on the Internet, requiring small capitals to open an account. Once you open your account, the next step is to understand what you want from the market whether you want to buy and hold stocks, or to buy and sell when you realize profits, ie when your stock goes up in price. You may want experienced stock market brokers to help you do this if you have small knowledge of the type of companies you want to invest in. The stock companies will charge you more commission to help you do this, if you don’t want to do this yourself. But for all intents and purposes, this may be the best option for new investors.
You do not also have to have thousands in your stock brokerage account to begin buying stocks if you know where to look. Many stock market brokers require minimums in your brokerage account before you can start buying stocks. The fees many brokerages levy on small or lightly traded accounts easily can wipe out your returns. E*Trade charges about $25 a quarter unless you keep $5,000 in the account or make two trades within six months. Harrisdirect’s $15 quarterly charge is waived with three annual trades. Ameritrade waives its $15 quarterly fee if you keep $2,000 in the account. By contrast, two of the biggest discount brokers, Charles Schwab and Fidelity, typically require $50,000 and $30,000 balances, respectively, to waive fees.
Before you commit your cash, ask about account or maintenance fees, IRA custodial fees, inactivity fees (if you don’t make a minimum number of trades each year) and costs for common activities, such as transferring money or closing an account. Many investors do not know that they can start buying stocks through several stock brokerage firms which do not have any minimum investment requirements. For instance if you have $100 to invest in the stock market, you simply use such amount to buy as many numbers of shares $100 can purchase.
But you must remember that all brokers charge commissions for each trade you enter. Depending on what type of companies you are trading with, commissions for trades may range from $15-$35 each time you want to buy or sell stocks. But little known firms can go much lower in per trade commission charges. One of such company is called Share Builders. This broker only charges you $4 per trade, considered some of the lowest trading minimums available in the markets today.
But better still you may enroll in Share Builder’s other plan for the small market investor. That plan is called DRIPs which is an acronym standing for Dividend-Reinvestment Plans. Through such plan, you can invest as little as $10 a month and many of such plans don’t charge fees. Share Builder meanwhile, allows small investors to purchase partial shares by combining orders and purchasing stocks in blocks. Share Builder has no account minimums and no maintenance fees. For further details you may visit Share Builder on line. The firm’s web address is www.sharebuilder.com.