Open Online Trading Account

• 1). Identify the online trading firms, such as Scottrade and E-Trade, which have opened branch offices within your area. Although most of your transactions will be done online, a human touch may still be necessary to guide you through different phases of the online trading process.
  
  
• 2). Classify online trading accounts into cash and margin accounts. With a cash account, your buying power for trading stocks is limited to the amount of cash that is deposited into your account. With a margin account, you may borrow against your cash balance on a dollar-for-dollar basis to make larger investments. For example, you could purchase $20,000 worth of stock on margin with a $10,000 initial investment. Margin also allows you to sell stocks short. When you sell stocks short, you borrow shares from another investor and immediately sell them for cash. At a later date, you will re-enter the market to buy the same stock back and replace the original loan.
  
  
• 3). Evaluate your level of investment sophistication before choosing the right type of online trading account. As a beginner, a cash account can help you to manage the risks of large losses. As you gain experience, margin trading may be ideal to increase your potential returns at higher risk levels. Options are also available through online trading, where you can use derivatives to lock in prices to trade investments. For options trading, you must sign a disclosure statement that alerts you to the risks of these products.
  
  
• 4). Visit your local brokerage branch to complete account set-up paperwork. You may also file this information through an online trading firm's official website.
  
  

Executing Online Trades

• 1). Review your banking statements to find a ready sum of cash with which to make an initial deposit into your online trading account. From there, you will subtract your monthly expenses away from your monthly income to calculate the amount of money that is available to add to the online account on a regular basis.
  
  
• 2). Log on to your brokerage account and toggle through the online interface. Your online account should have tabs for accounting, trading and research. The accounting tab is especially important, as it documents your investment balances and trading history.
  
  
• 3). Trade investments according to your financial objectives. To trade, you will pull up the trading tab and enter an investment's ticker symbol, which you may also search for through the trading portal. From there, you will indicate the unit amount of the investment that you wish to buy or sell. After executing the trade, you should observe a confirmation that summarizes the order.