You may have bought shares in the past using a stock broker, but buying shares online is very different. If you wish to do so here are a few essentials you will need:
- A computer with internet access
- An online stockbroker broker
- A real time price feed
Choosing An On-line Stock Broker
There are two main types of stock brokers which offer considerably different services: advisory brokers and execution only brokers.
Execution only brokers provide no advice but only carry out the stock trade as per your instructions. Advisory brokers do this but will also give advice on which stocks to buy or sell. Advisory accounts are more expensive than the former for obvious reasons, and if you wish to open such an account you may be required to deposit a large amount of money into a trading account upfront. Execution only brokers are more suitable for people who wish to do their own analysis and research in order to decide which stocks they wish to invest in.
As per normal stockbroker transactions, online stockbrokers will charge a fee per transaction. This is normally around $10 per transaction but can be lower, and the type of service package you receive from your broker is a factor their pricing plan, as is the volume of shares you're trading. Some online stockbrokers also require a minimum opening balance, but it is also likely to find a free introductory period allowing you to test out the stock broker's services and web platform. A significant advantage to joining an online stock brokerage is the services they provide to their customers including up to the minute stock reports, real time stock market levels, and historical data or online community forums. They should also provide a real-time price feed giving up to the second stock prices.
For expediency, online share trades no longer necessitate the obligation to send out a share certificate, due to the cumbersome postal service, but instead shares can be held in a nominee account by your stock broker. This greatly speeds up the share buying process allowing people to day trade, that is buy and sell the same shares in the course of a day. This does however limit the company whose shares you have bought in identifying you, so you are unlikely to receive any company data and reports unless your broker passes them onto you. Holding a certificate is also likely to increase the brokerage fees as more administration is involved, and when it comes to selling it is likely to take longer to settle.
Most online stock brokers give you access to international stock markets so you can buy international shares online also. With modern technology buying shares online is also possible from your mobile phone too provided it has internet access, so you can trade stocks online wherever you are.