Unlocking Stock Market Investing: Your Top 5 Questions Answered

Is it true that all brokerage firms are just scams? What happens if a broker declares bankruptcy—are my funds safe? How much money is required to start trading stocks? How can I avoid falling victim to fraud? In this article, we address the most pressing questions about stock market trading.

Previously, we've introduced NETTRADER and their platform Tradernet.com. Naturally, some readers expressed skepticism, suspecting it might be a scam.

Representatives from NETTRADER have thoroughly clarified common concerns, explaining the difference between legitimate brokers and unscrupulous operators preying on people's eagerness to earn money quickly.

Drawing on these insights and expert advice from NETTRADER, this article aims to clear up doubts, teach you how to identify genuine brokers, and provide a walkthrough of the Tradernet.com trading terminal.

How Does Stock Market Trading Actually Work?

One of the first questions for aspiring investors is: Why do I need a broker? Can't I buy or sell stocks directly on the exchange as an individual?

Legally, individuals cannot execute trades directly on stock exchanges. A licensed intermediary—such as a brokerage firm, bank, or asset management company—is mandatory.

The stock exchange organizes securities trading, but buying and selling stocks is straightforward: you place an order with your broker via phone or through a trading terminal—software installed on your computer or accessed via browser.

Once your broker receives the order, it is transmitted to the exchange within seconds, where it waits for a counterparty willing to sell or buy the shares.

Knowing which stocks to buy or sell requires financial understanding and intuition. If you’re not ready to dive deep into analysis, consider hiring analysts to build your portfolio and provide recommendations.

Alternatively, you can practice with a demo account, granting you a virtual balance of one million dollars to test trading strategies risk-free.

Keep in mind, though, that demo trading differs from real trading, where commissions, taxes, and emotional factors impact your results.

Do You Need an Economics Degree to Trade Stocks?

While anyone who can read can start learning, no formal economics degree is required to trade. You won’t be asked for a diploma, and with dedication, you can grasp financial concepts on your own.

Before investing real money, practice on a demo account, read educational materials, watch webinars, and explore instructional videos. NETTRADER even offers a dedicated YouTube channel and daily 15-minute pre-market webinars discussing economic trends.

Learning takes time—possibly months—but remember, mastering any profession requires effort.

Unlike gambling, stock trading is a strategic investment process combined with analytical work.

To succeed like a Wall Street pro, build your experience and knowledge first, understand risks, and develop a solid trading strategy. This approach minimizes the chance of significant losses.

Can You Start Trading With a Small Budget and Still Make Money?

NETTRADER’s minimum deposit is $40, which might be insufficient to build a diversified portfolio. With such a small amount, you might only afford a single stock lot, which can be risky and stressful.

However, the choice of investment amount depends on your financial situation and goals.

Consider the example of Vladimir Ryazantsev, who began his personal pension fund with a $40 initial deposit and monthly contributions of $40. Instead of merely saving, his investment grew to nearly $720, demonstrating the power of disciplined investing.

You can follow Vladimir’s journey, read his blog, and communicate with him via Tradernet.com’s messaging system.

Tips for Choosing Your Starting Capital

Invest only money you can afford to keep untouched for at least five years. Avoid using funds reserved for urgent needs like medical expenses or major purchases.

You can incrementally increase your investment, ultimately building a portfolio that generates significant returns.

How to Find a Reliable Broker?

Since trading requires a broker, selecting a trustworthy one with reasonable fees is crucial. Here’s how to verify:

1. Verify Broker Licenses

A legitimate broker holds licenses for brokerage, dealing, custodial, and asset management activities issued by regulatory authorities. In Russia, for example, licenses are granted by the Central Bank’s Financial Market Service. Older licenses may bear the Federal Financial Markets Service (FFMS) label but remain valid.

NETTRADER operates with brokers licensed in Russia, Ukraine, and Europe, all certified by their respective regulators.

2. Confirm Exchange Access

Beware of “kitchen” brokers who simulate trading without executing real market transactions. They display stock quotes and allow order submissions, but trades occur only virtually, often resulting in client losses while the broker profits.

Real brokers benefit from your long-term success since they earn modest commissions per trade, incentivizing them to support your profitable trading.

You can verify if a broker is authorized to trade on official exchange websites, such as the Moscow Exchange or the U.S. Securities and Exchange Commission (SEC) website.

3. Understand Fees and Charges

Hidden fees can erode your profits. Carefully review commission structures, withdrawal fees, and any additional charges. Ask your broker questions until you fully understand the cost of each trade.

Remember taxes: in many countries, including the U.S., capital gains are taxable and should be factored into your net returns.

NETTRADER offers several pricing plans, including a monthly fee of $8 covering trades up to $20,000, or a pay-per-trade option at 0.15%, suitable for investors holding positions longer.

What If the Broker Goes Out of Business? Will You Lose Your Money?

Brokerages act as intermediaries and do not own your funds or securities. If a broker loses their license or closes, your assets remain safe and can be transferred to another broker.

NETTRADER clients’ funds are held with clearing organizations such as the National Settlement Depository or accredited banks. These entities are legally prohibited from using client securities or funds for their own purposes.

Your rights to securities are recorded separately in a depository account that the broker cannot access for personal use.

If a broker loses their license, they must notify clients within three days and facilitate the transfer of funds and securities upon request.

We hope this article has clarified the stock trading process and broker selection. If you have further questions, please ask in the comments—NETTRADER specialists are ready to assist.

Below is a video demonstration of the Tradernet.com trading terminal in action:

Explore useful articles in Career, Education & Entrepreneurship as of 22-11-2021. The article titled " Unlocking Stock Market Investing: Your Top 5 Questions Answered " offers in-depth analysis and practical advice in the Career, Education & Entrepreneurship field. Each article is carefully crafted by experts to provide maximum value to readers.

The " Unlocking Stock Market Investing: Your Top 5 Questions Answered " article expands your knowledge in Career, Education & Entrepreneurship, keeps you informed about the latest developments, and helps you make well-informed decisions. Each article is based on unique content, ensuring originality and quality.