How To Get Started With Online Trading

A few years ago, I worked at a company that was taken public. It was all very exciting. The company celebrated in a big way and offered all of the members of the leadership team “options.” What the heck are “options”? To the Google we went. We found out that options were something we had the ability to exercise to buy the company stock at a set price. As with most stocks, the “options” were set higher than the current price, but the hope is that one day, the stock will flip and our “options” will be a good deal.

Well, that never happened. And in fact the company went from hero to zero in about 18 months flat. They actually removed themselves from the IPO and went back to being a privately held company. But that’s a story for another day.

As employees, we had no idea how to get started with trading stocks or how to invest in the company on our own. What we found out through doing a little research, was that our banking and brokerage firms had “play money” we could invest with to learn the ropes. Do you know how fun it was to log onto the internet and invest $250,000 of fake money? Well, it was fun for a while anyway. The point is that we didn’t have to invest any of our hard earned money to find out that we didn’t know how to invest.

The point of brokerages is that they are supposed to help you make decisions about your investing, but we wanted to find out for ourselves what it was like to move money around in an online trading platform. We used these “sandboxes” to pick and choose which companies to invest in, and we could watch our investments soar or sink.

In real life, we make investments all the time. We don’t think about them as risks because we get tangible products or services in return. Guys like James May, who invest in automobiles, might tell you that buying tangible items is the way to use your money. But there is nothing like the thrill of watching your fake money climb the fake money ladder online.

When you are ready, or if you have questions, consult a broker or your investment specialist at your bank. Typically, brokers can shop around for investment deals, whereas your bank is limited in what it can offer you. They both exist to serve different clientele. And if you are like me and my coworkers, you can use online investing on your own. Learn the ropes with some fake money, make some mistakes with fake money, and then invest with your real money.

The trick is to not obsess about your money. Don’t invest more than you can afford to lose (a tip I wish others had shared with us before we dropped thousands of dollars on a losing pony). Don’t worry about the day to day ups and downs of the stock: look at the big picture, over a period of time. And lastly, if your gut tells you something is wrong, it probably is. Be informed and stay informed and you’ll be off to a great investing career.

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