Online Investing Tips

1. If you are new to online investing, be cautious. Start with smaller investments that will be easier to keep track of. Add investments when you are more experienced.
2. New online investors are prone to overly concentrate on stocks in one sector, such as Technology. Your investments should take into account your time horizon and risk tolerance, and develop a well-balanced portfolio.
3. If you are invested in mutual funds, don't sell your long-term investments so you can start "playing in the market" in individual stocks.
4. Extensive trading can be expensive. Your costs can add up very quickly. One of the costs often forgotten is the federal capital gains tax.
5. Use limit orders. A limit order is an instruction to buy a security at a specific price. The order can be executed only if the market price has not moved beyond a certain level. Example: An investor may want to buy ABC stock at or under $10. If the price moves above $10, the trade is not executed.
6. Additionally, investors may want to put a stop-loss order in place. A stop-loss order sets a sell price for a broker. When the security's price drops below this price, it is automatically sold.
7. Without a "limit", an order is considered a market order. Placing a market order means you won't necessarily get the price you see when you buy or sell online.
8. Trading online is not without hazards. You may be away from your computer when the market makes a major move. Your internet connection could be down. Servers, power and phone lines could be down. Have a backup phone number available for unexpected problems.
9. Make use of the internet to help you make informed investment decisions. Be familiar with all the resources available to you.