But, as more investors explore the Internet for personal financial management, it is important to remember that it is just a tool. A basic knowledge of personal finance and a clear understanding of the potential risks are essential to investors, especially when they enter cyberspace. Some investors use the Internet to trade frequently with the hope of profiting from a rapidly changing market. Although the possibility of quick profits may be alluring to some investors, this strategy can be risky. Market volatility, inaccurate information about anticipated changes in stock prices, and delays in the execution of online trades may lead to financial losses.
Some investors research investments and then place trades without any professional guidance.
Others use the Internet to manage a few of their investments on their own and then consult an investment adviser for help in managing their remaining investments in person. Whether you manage your investments on your own via the Internet or by working in person with a broker or investment adviser, it is essential that you know what types of securities you are purchasing, how they meet your investment goals, and the risks associated with each investment. Ten Tips for Online Investors While online trading can be a hands-on learning experience for investors, it may not be appropriate for everyone. The following tips were developed by the North American Securities Administrators Association, Inc. to educate investors and help them to think carefully about online investing. Receive full disclosure about the alternatives for buying and selling securities and obtaining account information if you cannot access the firm s website.