Mere thought of trading or buying and selling shares for the first time can be daunting. For the novice, it probably conjures up all sorts of scenarios and images like the chaotic dealing room full of frantic bankers surrounded by flashing screens.
Then there is the impenetrable jargon like shares are squeezy, markets are uneasy, investors are queasy. But with appropriate investing online information, online trading is a handy, confident and unintimidating introduction to the stock market with approximately 100 online share trading websites available, each offering varying pricing and trading option combinations.
There are a number of reasons for investment online, and knowledge of investing online information allows better options than the traditional trading systems, more so to those looking to invest small amounts. The first big advantage is cost. Traditional brokers usually charge a percentage fee of the overall trade cost which quickly multiplies if the trade involves large sums. On the contrary, most online trading sites charge a flat, one-off admin fee of £7 to £20 per trade, while others also levy a small quarterly or annual membership fee.
When choosing an online trading site it is advisable to look at what extra features they offer and not just their charge. Many provide free research and analytical tools with details of your chosen firm’s recent financial history, with hints and tips from top analysts in the industry. Some others also issue a regular newsletter with trading tips and investing advice.
Buying shares online is very simple – you only need to have an online account which can be set up in 15 minutes by filling out an application form. To buy shares in a particular company you simply search for the company you are interested in and click to buy. You only need to enter the number of shares you wish to purchase or the amount for which you intend to purchase. On successful purchase, the shares are listed in your online portfolio and reflect the current share price and the profit or loss you have accrued.
Another option from certain web-based brokers is so-called ‘batch dealing’ in which your online brokerage bundles up similar trades and executes them at specific points in the day. This can bring the cost of a single trade down significantly but it can also mean you may not necessarily get the best prices for your shares.
ONLINE SHARE DEALING TIPS
Calculate the amount you want to invest before starting trading.
Avoid dealing before 9 am and after 4 pm when trading volumes can be very low and the price at which you can buy and sell shares may be wider than usual during these times.
Set price limits above which you will not pay if you are buying shares or below which you will not accept if selling shares. There is normally a charge for this if you don’t go through with the deal.
Avoid buying and selling shares often as it costs money to trade, and excessive trading will compensate your gains.
Diversify your portfolio with shares in around 10 companies from different sectors.