The process of stock trading has of course evolved a lot over the years as
technology as developed. In the early part of the 20th century you had to
physically visit a stock brokers office or trading room to buy and sell stocks.
When the postal mail became into common use you could then buy and sell stocks
by mailing a letter to your broker, of course today nobody would dream of doing
either of these.
Today the most common form of trading uses either
the telephone or stock trading online. When using the telephone to trade stocks
you can still do it by speaking to a broker and giving them your clear
instructions, or you can do it all yourself by using some form of menu system
using the digital key pad.
But by far the most common form of
trading is done online, so what do you need to know about stock trading online?,
more than you may think!
Here are some points that you may not have
1. Virtually every broker can do stock trading but what
about options, Forex and futures?. While you may not be interested in trading
either Forex or futures it is quite likely that at some time you will want to
trade options online, even if it is just covered calls. Make sure that your
chosen broker allows you to trade all the markets that you want to.
2. Of course the fee's charged by your online broker is an obvious point to
check, the fee's can vary a lot and if you are doing hundreds or thousands of
trades a day it can add up to quite a lot of money. Did you know that you can
just call up your online broker and ask for a reduced commission charge?, yes
you can, I've done it. Of course they don't advertise it but if you do a lot of
trades they will want to keep your business.
3. Have you planned
what you will do if you are in a trade and your internet connection goes down
for any reason, it could be a power failure, problems with the internet or your
PC crashing?. If you are in a day trade you will want to telephone your broker
and manage your trade, probably you will just want to close it. How will your
broker deal with your call, will they answer quickly, will they look at charts
for you and describe what is going on?. Make sure that your broker has good
4. Are your trading funds safe?, make sure that
your broker is a member of SIPC, the Securities Investor Protection Corporation,
which protects against losses caused by the financial failure of the
broker-dealer, but not against losses resulting from depreciation in a
security's value. Usually accounts are protected by the Securities Investor
Protection Corporation (SIPC), up to $500,000 (including up to $100,000 for cash