Are you wondering how online trading works and whether it's something you can do? Wonder no more.
Millions of average folks are successfully trading online. All you need is a computer, a modem, and access to the World Wide Web. You simply open an account with the brokerage of your choice by filling out some paperwork and mailing in a check. Then click over to its website, log on via a password, and proceed to check the status of your account or place a trade order. All reputable online brokerages have security measures in place. Read up on them first at the website, to ease your mind.
Many investors comfortable with making their own decisions find online trading preferable to old-fashioned alternatives. It's cheaper, with some rates as low as $7 or less per trade, versus full-service brokerage fees of up to hundreds of dollars. Online, you can examine orders carefully before placing them. And you don't have to listen to 101 Strings play "Stairway to Heaven" while waiting for the next available broker. Instead, you just quickly order up some shares of Home Depot
What should you look for when shopping for a broker? That depends on what kind of investor you are, but here are 10 aspects to investigate:
1. Trading commissions: How much will it cost to buy stocks or other securities you'll want in your portfolio?
2. Other fees: Check for annual maintenance fees, or inactivity fees if you're not a frequent trader.
3. Minimum initial deposit: If you don't have a lot of investable assets, look for a broker with low minimums.
4. Customer service: Check out the reputation of the broker's customer service (you can begin at our Discount Broker discussion board).
5. Traditional banking services: A brokerage account can often double as a checking account.
6. Research: Does the broker provide objective, independent security analysis?
7. Mutual funds: If you're interested in funds, make sure your broker has access to high-quality, low-cost fund families.
8. Investment product selection: Will you want certificates of deposit? Options? Bonds?
9. Other methods of getting your trades executed: If your computer is down -- or you're away from home -- can you make a trade via phone?
10. Other freebies and perks: Many brokers offer special deals to new customers, which may be the final bonus that tips the scales in its favor.
Want to learn more? Then visit our Broker Center.
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