When you start investing online, learn how tools can work for you, particularly order options. For instance, market orders let you automatically buy or sell stock at current market price. Stop-loss orders sell stock when it drops below a preset price, allowing you to minimize losses when you can’t watch your stocks.

You should educate yourself about all aspects of investing as well as businesses in which you’re invested. Investing online does not excuse you from understanding market. If you’re dabbling in market, you should remember that there are tens of thousands of people who are seriously investing, learning all tricks, and reading every word of Wall Street Journal. By choosing to not educate yourself, you’re changing what could be educated online trading into a gamble, and a gamble that leaves you at a disadvantage. It’s like playing poker, betting every time, and just hoping your cards come up.

Investing online is not a surefire way to get rich. Most day traders lose money. You should remember that your stocks may not sell anywhere near time you put it up for sale; it could not sell for hours, during which price may drop or rise. You can use limit orders to minimize some of this uncertainty. And even though you can access your online account anytime you want, your trades will not execute until market is open.

You should also avoid rapid buys and sells, following short-term vagaries of your stocks. You’ve noticed how other lane in traffic is always moving a little faster – no matter what lane you’re in? Scientists studying this phenomenon – seriously – have determined that this is a matter of perception. The stock market does same thing to you. When you sell and buy whenever you see a stock rising and falling, you’re putting yourself in slow lane almost every time. It’s better to look at long-term trends of a stock when investing online – or offline.

Choosing Your Index Investing Fund

You should educate yourself about different indexes available before you choose a specific fund. If you’re interested in blue chip stocks, you should invest in a fund based on Dow Jones Industrial Average; this index tracks thirty crucial companies heavy in blue chips. If you want a more diversified portfolio that is based on a realistic picture of American stock market, you should look for a fund based on S&P 500.

If you’ve been looking overseas at advances made there, you should look for an index investing fund based in a promising foreign economy. South Korea is emerging as a world leader in health technology, for instance, as well as a prime area for outsourcing by American companies.

As in any mutual fund, you should look to long term rather than short. Index investing funds may be volatile in short term, but historically they’ve always gone up. Some analysts are predicting a tripling of stock value by 2020, in fact; this may be overly optimistic, but long term gains will be offset if you overcompensate for losses and sell your holdings early. Experts generally recommend that you leave your mutual funds and index investing funds alone most of time, making adjustments on an annual or semiannual basis.