Online Stock Trading Is Just a Mouse-Click Away
The trading floor of the New York Stock Exchange is controlled chaos. People screaming. Hands waving. Numbers flashing everywhere.
Not too long ago, if you wanted a piece of this action, your only option was to call your broker, tell him or her what you wanted, wait for the transaction to go through and pay the broker a commission.
Now, all you need to get started is access to the World Wide Web (and, of course, some money). In the last two years, dozens of brokerage houses have taken to cyberspace. Some of them, like Datek (https://www.datek.com) and E-Trade (https://www.etrade.com), were founded specifically for online trading.
Others, like Charles Schwab (https://www.eschwab.com) and Fidelity (https://www.fidelity.com), are simply online extensions of longtime brokerage firms.
Just how much money you need to get started trading will depend on which online brokerage you choose. For example, you can open an account at Datek with a $1,000 minimum investment.
On the other hand, if you go with Charles Schwab, you’re going to have to pony up $5,000. If you’re just getting started, I suggest you start off small.
Another factor to consider is the brokerage’s fee per trade. Although the online firms charge lower fees than traditional brokerages, rates vary among companies.
For example, Datek offers one of the lowest rates of any online brokerage at a flat $9.99 per trade. E-Trade’s flat rate is $14.95 or $19.95, depending on the stock exchange. And at Charles Schwab, you’ll pay $29.95 for trades of up to 1,000 shares, and three cents extra for each share after that. Depending on how much trading you do, these differences can add up.
Finally, you’ll want a system that’s easy to use. Although it’s true that you’ll be using your Web browser, each company still designs its own user interface. Your best bet is to try the interface before you decide.
Thankfully, many of these firms have online demos. For example, the Web address for the E-Trade demo is https://www.etrade.com/visitor/demo, and you can download a Windows-compatible demo of the Schwab system at https://www.schwab.com/SchwabNOW/SNLibrary/SNLib003/SN003Demo.html
Once you select a brokerage, your next step is to fill out an online application. Virtually all of the online brokerages offer secure applications--meaning that the information you transmit is encrypted--so you don’t have to worry about cybercriminals accessing your information.
The brokerage will acknowledge your application by e-mail or surface mail and provide instructions on where to mail your deposit. You then mail your check and you’re ready to start trading.
I want to be clear that I’m not endorsing any of the sites mentioned here. I’ve included them only because they’re among the most popular. I encourage you to check others.
Of course, brokerages aren’t the only source of online stock information. There are plenty of free investment resources on the Web. Be forewarned: Financial swindles and promises of quick profits are rampant on the Internet.
The Securities and Exchange Commission’s CyberFraud site (https://www.sec.gov/consumer/cyberfr.htm) provides valuable information about scams.
On a lighter note, one of the most entertaining sites is called Doh! Stock Picks (https://www.doh.com). This site says that it “takes the Homer Simpson out of stock picking.”
Kim Komando is a TV host, syndicated talk radio host, author and entrepreneur. You can visit her on the Internet at https://www.komando.com or e-mail her at komando@komando.com
