Earlier, you had to depend upon the recommendations of your stock broker while doing trading in stock market. More often than not these brokers used to manipulate your decisions based on their senior management directions and the commissions they used to get on different stocks. Therefore, you could never trust your stock broker to give you an honest and right financial decision.

But times have changed since the internet has come into picture. There are various online brokers which are available on the internet now. You can directly open your account with one of these online brokers and trade from the convenience of your home. There is no physical broker involved. The added advantage is that you can do the trading directly and the trade execution happens in a couple of seconds. Most online traders guarantee the execution of trade within a few seconds of your order. This is a great feature since it saves you a lot of time.

Other major advantage of using the online brokers is that the commission charges are much less now. Since the online broker companies don’t have to employee hundreds of physical brokers to do the trades, their operation costs are low. Therefore they are able to pass on that benefit to you. Most online brokers take a nominal commission between $7 and $10 per trade which is less than traditional brokers.

Opening and managing an online trading account is very easy. Since everything is done online so you hardly have to go to any office to submit your application. The easiest option is to fill up the application form electronically giving all your personal details. The online broker reviews your application and approves it. You can setup your personal savings or checking account with the trading account using an ACH facility. In this setup, the money can be easily transferred from your personal account to trading account when you need money to buy stocks. This makes the whole process of online stock trading easy and free of any physical check writing.

Some people are intimidated by this procedure since they are afraid of online fraud scams which they keep on hearing. Their fear is legitimate since there are a lot of fraudulent websites on the internet. It is recommended to always go with a reputed online brokerage house to prevent any such thing happening to you. Some of the best online broker companies available today are Fidelity Ameritrade and E*TRADE. In another topic, we will cover how to choose the best broker for online trading account.

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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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