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Trading Online

Written by ForexCult Team
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Trading Online As you know, if you are a trader that is trading online, there are a couple of things that you should be aware of before you actually begin trading online. These bits of information are so that you are able to make the right decisions about situations that can occur when you are trading online. Just as if any other market there is rules and also regulations when you are trading online through a broker or a firm and you should be aware of them because if you don’t follow them, there is a chance that you could lose a bunch of money in the process. The first thing that I would like to tell you when it comes to trading online is that if you actually purchase what is known as a security in your personal cash account, it is important that you know that you have to pay for the security before you can actually sell it. There are many traders that are trading online that do not know this and it is important that they should. When you take into consideration, a cash account, it is important that you know that you as the trader must pay for your purchase of the particular stock before you can actually sell it to someone else. If there is a time when you purchase and also sell your stock before you make the payment for it, you can be considered “free riding”. Free riding is a violation of what is known as the credit extension provision of the actual Federal Reserve Board. If you are caught free riding, your personal broker must perform an action that is known as a freeze on your account for up to ninety days. During this period of time, you as the trader can still participate in trading online, however, you have to pay the full amount of the purchase on the actual date that you trade until the freeze period is over for you. Trading Online and Avoiding the Freeze Period There are however a couple of ways that you can avoid what is known as the freeze period, in which I think that you should try and make sure that you do avoid this period of time. The first way that you can avoid the freeze while trading online is by making a full payment of the amount that you owe on the trade within five days of the date of the original purchase of the stock. This payment that you make however can not come from the amount of money that you as the trader have made from selling that particular stock. There is one more way that you can avoid a freeze, however the chances that you actually get access to the chance is slim to none because when you ask your broker for a waiver or extension they are normally just going to shut you down and not give it to you. See this is why it is so important that you know what is going on with trading online, because there may come a time that you are put into a situation that you are not sure of how you can get out of it. If you take the time to study the situations that can occur and you work to avoid them, you will have nothing to worry about. Trading Online and Trading on Margin I know that you are tired of hearing about what you should and shouldn’t do when it comes to trading online but I am fixing to tell you about a fact that you could not be aware of and if you are dealing with a broker, you are going to want to keep this in mind. It is important that you know as a trader that if you trade on margin that you’re personal broker can sell your securities without having to even give you a margin call. This means that it is time for you to pull out your margin agreement and reread them; you are going to need to make sure that you pay close attention to the very fine print. On the other hand if your account is below what is known as the firms maintenance margin requirement, your personal broker has the actual legal right to actually sell your securities at any specific time that they are ready to without consulting or letting you know first. Trading online doesn’t have to be your enemy, if you take the time to read and understand trading online you will notice that there are ways for you to avoid getting into those horrible situations. Take your time and read all the information that you need to know about trading online and also make sure that trading online is something that you really want to do.