Online Trading Beginners - One Secret The Pros Use Every Day

Online Trading is an amazing way to create a stream of profits in addition to your day job. It is fun, easy to get started in and is accessible to anyone with an Internet connection. For beginners just getting started with online trading, here is a common practice of experienced traders that you must use in order to be successful in the long-term:

Use a Stop-Loss Order!

This is mandatory. At the time you place your buy order, you should ALWAYS, ALWAYS place a Stop-Loss order along with it. Think of it as the online trader's version of the buddy system. You need to go into your stock purchase with a buddy in case something goes wrong.

A Stop-Loss is a sell order for the same amount of shares that you are buying. You will place that order with a sale price that is lower than what you are buying the stock for. So if your dream stock starts dropping down to where you set your Stop-Loss order, it will automatically sell your entire position.
For beginning online traders, it is important to use a Stop-Loss because usually you can't watch the market at all times. There is nothing worse than coming home from work, logging on to your online account and seeing that you have taken a huge loss.


It is also important at times when you are watching the market. If your stock starts dropping, panic sets in and now you are in a battle with your emotions. "Should I sell now, or see what it does next?" Or "I am sure this stock is going to rebound soon." If you set your Stop-Loss at the time you buy, you can make a more rational decision about where to set the sell price.


Just where to set the price on a Stop-Loss is subject to debate. Unfortunately, it all depends on the stock you are investing in and your style. For penny stocks and other small caps that fluctuate a lot, your Stop-Loss will be lower on a percentage basis than with a blue-chip stock. The bottom line is that you should set the Stop-Loss at whatever you are willing to lose.

A Stop-Loss is your buddy. Take it with you on every single trade. It is better to take a controlled loss and move on than to take a huge loss that you will regret.

About the Author

Download my free guide, "7 Steps to Online Trading Profits" to learn how to get your online trading going fast and profiting quickly at http://www.BeginningOnlineTrader.com
Daniel B. Johnson is based in Dallas and maintains a successful online trading career on a part-time basis to earn an additional income stream.