With all the ease the Internet brings to the Information Age, opening an online trading account could not be made any easier than it already is. All you need to do is:
Pick an online stock broker
Essentially, online stock brokers come in two forms
• discount stock brokers, and
• discounted discount stock brokers.
The primary difference between these two different types of online stock brokers is the commission they charge. While, in most cases, discount stock brokers charge commissions of between $7 and $10 per trade, it is possible to trade with discounted discount online stock brokers for commissions as low as $0.01 on the value of the trade (i.e. for a $100 trade, your commission is $1).
Nonetheless, as most online stock brokers do not provide their clients with research information about which stock to buy and sell (which is one reason why their commissions can be so low), one of the most important aspects you have to consider before opening an online trading account is to find out whether or not they have instant ‘real time’ access to stock trading prices. If not, and there is a time-lag between the quoted price and your buy/sell price, you could find that this ends up costing you far more than the commission would otherwise have cost. Therefore, be prepared to pay a higher commission for a more instantaneous stock quote price.
Completing the online application
Having decided on which online stock broker to open your trading account with, you then need to complete the online application form. In some cases, you will need to print off the online application form and send the hard copy to the broker as confirmation before you’ll be allowed to trade online.
Joining Fees
In addition to a per trade commission fee, some online stock brokers will charge you an introductory new member fee when opening your online trading account. However, with competition among online stock brokers to get your business being intense these days, others offer very attractive joining promotions. Given that you could one day possibly be trading large numbers of shares through the broker, while you should always consider the value of joining fees, it is advisable that you do not base your whole decision on whether to open an online trading account on this aspect alone.
Deposit your money
When opening the online trading account, you’ll be instructed as to how to deposit your money with the broker. In some cases you can make your deposit via credit card, in others you’ll need to make a physical payment into a bank account. Once you have completed the online application form and deposited your money, you’ll be free to start trading.
