It is becoming more and more popular to buy and sell shares online because it is cheap and more convenient. Online stock trading is open to anyone who has access to a computer and enough money to open a trading account. Buying and selling shares online is known as execution trading as no talks are entered into, deals are simply closed.
When you buy and sell shares online, you will have an Online Broker who is the licensed individual who will trade online on your behalf. You have to do all your homework though because your online broker doesn't commonly offer the added service of advising you on trades. You will have to tell him where and how much to buy or sell and at what time. There are, however, some online brokerages that offer advice services to clients at an added fee.
Choosing A Broker:
Before you can buy and sell shares online, you need to find an Online Broker to do your trades for you. There are a few things to consider during this process:
How much you plan on investing in online shares - some broker firms have a minimum requirement for new clients looking to invest.
How often you plan on trading - whether you are looking to acquire shares and hold on to them or whether you want to buy and sell as the market fluctuates.
Advice services - will you need your online broker to advise you on trades or not? These services are only offered by some firms and usually come at extra cost.
Is the brokerage reputable? You need to find a firm and an Online Broker that you can trust with your money. Read client reviews on their websites and confirm that they carry the required licenses to trade.
Once you have made a decision regarding a brokerage firm, you will be required to open and fund your account. There are many options you will have to choose from like whether you want a cash or margin account. A cash account works like a regular current account, where you can only spend what you have. A margin account is like a loan account that you can borrow against and then pay back at a later date