| Online Stock Trading
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| Trading -
Basics Online |
| In order to open an account you would typically need a
minimum balance. Once you have opened an account, you can execute transactions through
this account via their web site. Once orders are executed, you would usually receive an
e-mail notification followed by a notification via mail. The Online brokers typically
charge a certain amount of commissions per trade for some or any number of shares. Real
time quotes are available at all times, usually at no extra cost. Charts, news, and
research information are also available on the brokers' web site and you would have access
to these as a customer. |
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Online
Trading - Advantages |
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| Investors can log
on, punch a few buttons, and their investments are bought and sold in an instant. They
don't have to call their broker, wait for a call back, or listen to the spiel about the
mutual fund their company is trying to sell. Plus, if they're too busy during the day they
can place their trades after dinner. Just sign in, buy, sign out--it's that easy. |
| One of the key
benefits of online investing is control, you don't have to rely on your broker being in
the office at 9:00 when the markets open, and you don't have to worry about them being out
to lunch when you want to make a purchase. It's finally your decision, and your broker
won't be urging you to buy stocks to meet his quota. Investors can log on, punch a few
buttons, and their investments are bought and sold in an instant. They don't have to call
their broker, wait for a call back, or listen to the spiel about the mutual fund their
company is trying to sell. Plus, if they're too busy during the day they can place their
trades anytime when they want to log in. |
| The online
investing sector has become so competitive that commission rates have gone through the
floor. Purchasing 50 shares of a $30 stock from a traditional broker may cost you $90,
while you could do it online for $20 to $25. By taking the online route, you could buy
another three shares. And that can really add up. |
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Online
Trading - Disadvantages |
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| If you've ever
traded online, you must admit that it's tempting to buy & sell. The control and power
make it quite interesting. But what do you do if you're not sure the stock is a good buy?
You think, "I feel really good about this one. But what if I'm wrong? What if I don't
buy and it ends up skyrocketing over the next few years?" |
| These thoughts are
the greatest evasion of online investing. It really is nice to have a second opinion from
a broker and that's something that can't be replaced by a computer. If the physical
brokerages are still in business twenty years from now, it's because investors still need
handholding. |
| What
is the difference between cash and margin account? |
| With a cash
account, you must have full funds in your account prior to placing an order. A margin
account allows you to increase your purchasing power by borrowing against your stocks. You
may also borrow against mutual fund shares held in your account for 30 days or more. |
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Books Online |
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| Useful Web
Sites |
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