Online Share Dealing: An Overview

Thanks to the growing availability of high-bandwidth internet connections, online share dealing is becoming increasingly popular. Signing up with one of the many services available allows the investor much greater freedom and flexibility than is the case when dealing with a stock broker in the usual manner. Buy orders, sell orders and other common operations can be executed quickly after the input of basic parameters such as number of shares to be traded, and some share trading services may include the option of performing more complex operations. For instance, services that do not include access to real time share prices may allow the placing of a limit sell order (the lowest price the seller of a stock would accept).

Finding a Reputable Broker

There are many factors to consider when deciding which internet share dealing service to sign up for. One of the most important is to ascertain whether the online stock broker being considered is reputable: the broker may be situated anywhere in the world rather than in the same city or country. Can background information on the broker be researched quickly and comprehensively? Are they registered with the financial authorities and trade associations of the jurisdiction in which they are based? Are they a division or sub-division of a known reputable company? Are references and reviews available from previous customers and unbiased independent sources respectively?

Only when satisfied with the answers to these questions should potential customers sign up to an account with an online stock broker service: neglecting such precautions could leave them exposed to severe risk or criminal activity. Countries such as the UK and the US have protection against fraudulent traders, but it is better to avoid such problems rather than seek compensation after the event.

Projected Costs

When deciding on an internet share dealing service, it is necessary to assess the likely extent of trading activity in order to determine likely costs and charges, as different services are tailored to different levels of trader. Some low-cost services are designed for occasional, amateur share buyers, whilst higher-end services are more appropriate for serious professional traders. It is important to estimate how much buying and selling of stocks is likely to be done over a given period: those not fitting the target profile for a service are likely to find dealing costs significantly higher than if they had found one providing a better fit to their likely dealing activity.

Costs are usually divided between fixed costs such as annual charges and per item costs such as charge per trade, so once a quote for costs has been obtained it is possible to make a reasonable projection of charges.

Desirable Account Features

Online share trading accounts have a variety of features, and it is important to assess which are available before signing up. Is it possible to trade via phone and even in person at a company branch in addition to trading online? Is real-time share price information provided? Are any additional research tools such as company financial data available? Are special accounts such as ISAs and PEPs available? The investor should assess his or her own needs before buying and match them with the most appropriate trading service. Usually, though, it is worth paying a little extra for services with additional research tools and resources as the collating of relevant information can save much time, especially for the amateur investor.