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subject: How to Profit from Unstable Markets and Online Brokers [print this page]

How to Profit from Unstable Markets and Online Brokers

How to Profit from Unstable Markets and Online

Brokers.

For the relatively new to stock trading, online brokers become an invaluable

asset because of their extensive knowledge of the stock market. Although it's

true that choosing the online brokerage firms best suited to your needs also

depends on how much you're looking to invest, surprisingly enough the firms

that hit the top of most surveys are effective regardless of the amount of

money you're carrying. You'd be looking for three key factors with online

brokers; if they have a wide variety of fund selection, speed of service

(particularly useful when you need to buy or sell fast), and low fund prices.

But none of that compares to being ensured that the online broker you choose

has your best interests in mind.

What worked to the investor's advantage though is the very fact that trading

online was a flooded market for a while. As more investors demanded the

service, brokerage firms competed for favor, rewarding clients with many

more features for little money. Yet as of late there is an across the board lack

in annual earnings for online brokerage firms, because investors have waned

under the pressure of unstable market trends. As online brokers come to

terms with this, there is bound to be some changes in their management and

service policy. Low interest rates have been offered for quite some time now

to attract investors back into the fold, yet it is proving unsustainable for

brokers to continue cutting their losses.

Competent investors never leave the stock market, regardless of trends or

instability. Unstable markets are instead welcomed as an opportunity for

profit, to buy low and then sell high. Seasoned investors also don't stick with

one online broker, but liaise with a handful because each individual broker is

specific to different trading segments. Although this may not make sense to

the occasional investor, stock market trading is a culture and an art all on its

own. Successful investors learn how to be risk-tolerant, to not crumble under

changing scenarios, but rather to adapt and turn the scenario into a new

venture. The stock market becomes their nine-to-five self-employment, and

their key strategy is to diversify.

For the occasional investor it is important to remember that you can use a

broker as full-service, or at a discount. If you use a broker as full-service you

are essentially handing the investment responsibility over to them. This can

be useful when you don't quite understand the market yet, it ensures that you

don't devastate your portfolio through ignorance.

At discounted rates an online broker is more like a salesperson, rather than a

financial expert. You'd be developing your own portfolio, learning on the go.

You'd probably want some guidance on potential ways to invest, in which case

your best approach would be to interact with successful investors who can

impart the principle of risk-tolerance and diversification. Being in control of

your own portfolio is a rapid learning experience that can be ultimately

rewarding.

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