Simple and Cheap Stock Trading

We asked the question the other day, should you buy individual stocks? While the debate was more between choosing stocks or mutual funds, the idea is the same… both allow you to participate in cheap stock trading.

You don’t need to set aside thousands of dollars to do it, and requirements required can be as cheap or expensive as your want and/or as simple or complex. Basically you don’t need to be rolling in cash to start trading stocks, and thats what really makes it so great.

What’s ironic is that the easiest part of trading is the actual “trading” part. Give somebody a simple stock market analysis method and anybody can easily reproduce it. Where the money is really made is being able to efficiently break down the strategy and ultimately use some sort of tools or resources to help you execute the plan.

To take part in the stock market you just need 2 things: a stock brokerage and analysis tool.

While most stock brokerages offer the same core features, usually the main deciding factor for many are the broker commissions. Lets say you have 2 brokers: one that charges $9.99 per trade and one that charges $4.65 per trade. While it only looks like a $5 difference, if we extrapolate the difference over 100 trades we save over $500. Check out a full comparison chart of stock brokerages.

Generally the life of a typical stock trade goes as follows…

1. Analyze the market and find hot spots. Can be done for free with services like Google Finance, MarketWatch, and Wall Street Journal.

2. Find stocks to research within those hotspots. Can be done for free with sites like Google and Yahoo Finance.

3. Research and analyze those stocks you come up with. Can be done for free with sites like StockCharts.com and Finviz.

4. Execute trades on selected stocks with your broker. This can be done through your brokerage as well as the other 3 steps.

Using Quality Premium Services

In the world of financial markets there are basically 2 types of premium services should you choose to take that route. You either pay for a high end research tool, which gives you premium-quality information or news such as MarketClub or you pay for a stock picking service such as Tim Alerts. Either way you are essentially paying for somebody to give you more information that can’t be retrieved with your typical free stock trading tools.

Note that before completely rejecting premium services weigh the pros and cons. Sure it may cost you a little more, but what if that nominal fee resulted in much higher profits?

In the fast paced world of the stock market, cost also comes in the form of time. The longer it takes you to conduct research could easily mean the difference between higher returns. The key to cheap stock trading is not necessarily using all the free resources you can find, but utilizing all the tools, free and paid, to create a more efficient trading strategy.

If you take anything from this article, remember this: with the right tools stock trading can be as easy as you want. If you try to take short cuts and possibly penny pinch, it may not only result in a waste of time but also bad trades, and thats not cheap stock trading at all.