Things People Need to Know Before They Trade Shares

Published: 03/12/2013 by Frank Barry

Before anything else, people who want to trade shares should know the most basic things about stock trading or dealing. This is specifically true for those people who are just beginning to explore this trading field. Well, this is because they are the ones who need more guidance, particularly the very basics. As a matter of fact, there are at least five (5) essential things that new traders need to understand first. These are about the state regulations, comparison of rates, looking into the terms and conditions, as well as reading some reviews and even opening a demo account.

What does the regulation require?

Firstly, they need to check out the legitimacy of the account that they are going to open in order to trade shares. This is, in fact, among the basic rules in order to compare share dealing brokers and service providers. Well, this is because each country has their own sets of rules and regulations when it comes to the registration and control of these brokers. In United States, for example, the Financial Services Authority or FSA is the one that is overseeing this. The provider must have the appropriate registration number, which could be validated from the data or records of FSA.

The value of comparing their commission rates

Secondly, aside from checking out the legitimacy of these service providers in stock trading, traders must also be mindful of their commission rates. Of course, different providers have their own rates when it comes to commission. Hence, it is better to compare these rates among the various providers or brokers in order to get the most competitive and sound one. This is essential because this has a great effect or impact to the revenue or profit level of the trader. Who would not want to maximize their earnings at the end of the day anyway?

Understand the terms and conditions

Thirdly, while it could be very time-consuming, it is very much worthy to check out the details of the terms and conditions of the providers in order to compare share dealing brokers. This is due to the fact that it will be the traders' window in order to fully understand and assess the worth and value of the broker or account.

What do the reviews tell?

Fourthly, while doing the investigation and evaluation on your own is fine, it is also advisable to know what the other traders think about the brokers or providers. This is in order to gather other perspectives, which will surely have some lessons that you can use as your reference in the future.

Opening a demo account

Fifthly and lastly, another basic thing that traders should know it is the demo account. There are many reasons for doing this. The most essential one is for traders to experience a simulation of how it really feels or looks like when engaging into the share trading.

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