Online stock trading system has eliminated these issues. The stock trading is fast and easy thanks to the increasing use of internet. Not only this, the online trading system is also cost effective. You could save good amount of money since the commissions on online trades are less than physical stock brokers. There are various online brokers available in market today. You have option to choose from hundreds on such online brokerage houses but you should use some discretion while selecting the one for yourself.

There are various factors which need to be considered while selecting the right online trading service. Some of them are:

• The reputation and the customer base of the company. There are a lot of companies which are nothing but scams. You need to do some research and find a company which has a good history and reputation.
• What are the commissions charges per trade of the type of securities which you want to trade?
• Is there any minimum investment amount required by the company before you start online trading?
• Is there any inactivity fee per year in case you don’t want to trade for a specific period of time?
• Is there any guidance tool or telephone support available? Some companies like Fidelity provide these extras.
• What is the financial background of the company? Is it stable? Some good companies which are reputed are generally a bit more expensive than others for the service they provide. Sometimes, this extra cost is worth the peace of mind they offer.
• Lastly, how is the online trading experience in terms of online interface, easy of money transfer etc? For some people, this is one of the major deciding factors.

As mentioned earlier, you have to be aware that there are a lot of companies which are nothing but scams and you need to be vigilant about them. A few online brokers which are recommended by experts are Fidelity, TDAmeritrade, E*TRADE and Scottrade. Buying stock online using these online brokers is easy but dangerous if you are not careful about security of your computer. You should always have latest version update of anti-virus and anti-phishing software which would help you trade in secured manner.

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1. Online stock trading
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Well the procedure of buying the stocks is the same as earlier going through a broker in the offline world. The only thing that has changed is that the broker is now a company which has an online website via which you can trade easily and this website is your entry into the stock markets.

Before I begin the step by step guide process about buying stocks online there is some things that you will need to know especially about brokers. 

Full service brokers charge more fees and give investment advice and also have a investment advisors that will call you if they have a tip and also they will advice you on tax planning as well as other aspects of your portfolio. So you can open an account with a full service brokerage firm sitting in front of the computer. Since these are full service brokers the fees will be heavy as they provide you with specialized service. 

Discount Stock brokers are the brokers that will have a website where you can log on and set up an account. In these discount brokerage firms there are no investment advisors and no tax advice. They do not even tell about which stock to buy. Some of these have stock research reports sent by email to all the clients. That is the max they will do. Of course this is the reason they are called discount brokerage houses and they will charge less. Their commissions are very less on each trade. 

Tips before you open an account

Make sure that to check if they allow international stocks to be traded.

Also check if the brokerage allows you to trade in penny stocks.

Also check what the margin requirements for the broker are.

Also check if they allow pre-market trading and after hours trading

Check if they allow the options and future also with this account

Check is they allow mutual funds to be bought from the same account.

But stocks online for free is not a reality but you can definitely have the initial 10 or 20 trade free. 

Some brokers allow systematic purchase plans to be set up for a specified amount each month. Make sure that you check this facility.

 Step by step guide to open an account

Fill up the form

Do not gloss over the options account. Sign up and you may end up using this later.

Set up direct debit facility for funding the account with some amount. A lot of brokers have requirement of a minimum amount.

Once the account is funded then you can start trading 

Things that you should know are market order, limit order as well as good till cancel.

The main thing that you should be doing is the stock research to buy stocks yourself. That can two forms and these are picking the stocks based on the fundamental analysis of stocks or the technical analysis of stocks 

Do not time the market

If you are thinking that you will wait for the appropriate time to buy a particular stock and sell a particular stock then you need to understand that there is no clear answer to the question about when to buy stocks . 

Build a portfolio.

I will suggest that you should diversify and build a good portfolio of stocks based on the best stocks that you can buy. This diversification will be achieved by identifying various stocks in variety of industries and that will help to build a good stock portfolio.

 Get knowledge about stock exchanges.

 Now most of these discount brokers or the full service brokers have the option for you trade in either exchange that is the NASDAQ or the NYSE. Each of the stock exchanges that you have will have specific set of technology and each ahs its own index. Before you invest understanding the dow jones industrial average as well as getting know the definition of nasdaq is a must.

 Good luck with your trading.

Related posts:

1. Buying stocks online – How to choose online stock brokers
2. Online stock trading
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