Online Stock Trading - Essential Tips, Tricks & Strategies

							          Online Stock Trading – Essential Tips, Tricks & Strategies
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This book is supplied for information purposes only and the content inside
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          Online Stock Trading – Essential Tips, Tricks & Strategies
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                             INDEX

The Basics Of Online Stock Trading…………………………………………6
Types Of Online Stock Traders……………………………………………….7
How To Open Online Trading Accounts……………………………………. 8
Understanding Online Trading………………………………………………..10
How Online Trading Education Can Make A Difference………………….12
The Basics Of Online Day Trading…………………………………………..14
How To Get Free Online Trading…………………………………………….16
How To Be A Successful Online Trader With A Trading System………18
What Do You Need From Your Online Trading Software System?……20
The Benefits Of Online Stock Market Trading…………………………….22
The Best Way To Learn Online………………………………………………24
5 Tips On How To Find The Best Online Broker For You……………….26
What Basic Online Trading Service Do I Need?………………………….28
All About Day Trading…………………………………………………………30
The Three Types Of Online Trading Accounts……………………………32
24 Hour Online Trading (Canada)……………………………………………34
Trading Penny Stocks Online………………………………………………..36
Some Myths Of Discount Online Stock Trading………………………….38
Tips On Online Trading Comparison……………………………………….40
The Value Of An Online Trading Course…………………………………..42
The Real Cost Of Online Trading……………………………………………44




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          Online Stock Trading – Essential Tips, Tricks & Strategies
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          Online Stock Trading – Essential Tips, Tricks & Strategies
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              The Basics Of Online Stock Trading
The wonder of the Internet is the opportunities it provides to people where
previously there were none, or where the opportunity was severely restricted.
Nowhere can this be exemplified more than in the world of stock trading – with
easy access to online stock trading, everyone now has the ability to make (or
lose) vast sums of money from trading stock listed on one of the many stock
exchanges around the world.

What do you need to get started?
In order to get started in the world of online stock trading you will need:

   •   access to a computer

   •   Internet connection

   •   money to invest

   •   to open an account with an online stock broker

Aside from these, however, two additional vital elements that you’ll need
include (i) the discipline to know when to buy and sell stock, and (ii) an
investment plan that matches your chosen stock purchases.

Your investment strategy
Unlike most stock brokers, online stock brokers rarely provide clients with
advice on which stocks are buy/sell/hold recommendations. That said, some
do offer off-line services for this.   Consequently, if you are new to stock
trading, you may wish to avail yourself of this service, otherwise you will need
to research your stock buying/selling options yourself. If you are looking to
research which stock to buy yourself, you should look at purchasing online
stock trading software programs to help provide you with all the technical
information - such as charts, real time prices, information sharing – that you
are going to need in order to make an informed investment decision.




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                   Types of online stock traders

Basically there are four types of online stock traders:

(1) long-term traders – who hold their shares for one or more years

(2) medium-term traders – who hold their stock anywhere from 1 month to six
months

(3) short-term traders – who ordinarily hold stock for a week, but this can be
up to one month

(4) day traders – who buy and sell stock in the same day.

To start trading online
Once you have opened your account with an online stock broker, deposited
your money with them, picked the stock you want to buy, and the method of
trading you are going to conduct, all you then need to do is to press your
mouse a few times and the buy/sell order for that stock is complete.




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            How To Open An Online Trading Account

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.




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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.




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                 Understanding Online Trading

Recent changes in Internet technology affords regular people the opportunity
to trade online without having to necessarily give their broker minimum
buy/sell orders, nor do they have to pay large amounts of their trade profits to
the broker in commission fees.        However, with evidence showing that
approximately 80 per. cent. of new online traders losing money from the
offset, making sure you understand the fundamentals of online trading is
essential.

Trading strategy
Put simply, your career online trading is going to be made or broken
depending upon the trading strategy that you select.         Chose wisely, your
strategy will take advantage of the most opportune moments of when to buy
and sell stock and, thus, will protect your profits. On the other hand, chose
poorly and you could find yourself losing thousands, if not tens of thousands,
of dollars in a few minutes.     Here, your trading strategy is going to be
dependent on which one (or even all) of the four types of online stock traders
you are going to be, namely a:

(1) long-term trader who keeps hold of his stock for one or more years

(2) medium-term trader who keeps hold of his stock anywhere from 1 month
to six months

(3) a short-term trader who keeps hold of his stock anywhere from a week to a
month

(4) a day trader who buys and sells stock in the same day.

Without over emphasising it, in most cases the longer you keep hold of the
stock, the more chance there is that you will make a profit from your online
trading. However, there are very real possibilities that you can make lots of
profits day trading online – if you know what you are doing.




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Online trading software
If nothing else, the Information Age should have shown you that having
access to information at the right time will mean the difference between
making a profit and making a loss. To assist you with all your online trading
information needs, you should give serious consideration to purchasing an
online stock trading software program, which can provide you with technical
charts, real time stock prices and historical data about stock that you can then
use to analyse whether or not to buy/sell the stock in question.


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                      Software!




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How Online Trading Education Can Make A Difference

Each online trader will trade in their own style, depending on whether they are
going to be long-term, medium term, short-term or day traders. Making a
decision on the type of trader you want to be, however, means you need to be
aware of the trading education available to assist you.

Stock charts
Stock charts are used and analysed by an online trader in order to help him
determine when to buy and sell stock. The main types of stock charts in use
include:

   •   Line charts: which, as the name suggests, is a line on a chart
       connecting stock price over a period of time (can be minutes, hours,
       days, weeks, months, or even years).

   •   Bar charts: similar to line chart, however the information contained is
       the open, high, low and close price of the stock for one particular day.

   •   Reference chart – charts the stocks price and trading volume and is
       used to plot where the stock price may go to.

   •   Candlestick charts – the information contained in candlestick charts is
       the same as that you can find in bar charts; however, the display format
       is slightly different.

Technical indicators
As there name suggests, technical indicators are used by stock traders to
track a stock’s previous performance in the hope that it may forecast where
the stock is going to go. This is done by making use of the stock charts
previously mentioned, plus additional analytical indicators which might have a
part to play.

It should be noted that technical indicators can be very confusing if you are
new to this type of information analysis. However, basic use is made of a:




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   •   Bollinger band: which was invented by John Bollinger and uses 3 band
       lines to track stock price fluctuations: an upper, centre and lower. The
       centreline is the moving average, while the upper and lower lines are
       twice the plus and minus standard deviations, respectively.

   •   Moving average: is a stock price/time series technical indicator. These
       can then be calculated over short, medium and long term periods, as
       the need requires, to determine where the stock may go and whether
       you should be looking to maintain a short, medium or longer term
       position.

   •   Candle stick trend reversal: using a candle stick chart, a candle stick
       trend reversal technical indicator will use the information in the chart to
       determine when to buy in and sell out of a stock.

Keep in mind that there are other types of technical indicators in use, but the
above are the primarily the types used by new online stock traders.

Analysing the information
Assuming you have correctly analysed the stock chart and technical indicator
data, you should then be able to chart a stock’s movements – thereby
hopefully ensuring that you remain one of the 20 per. cent. who make a profit
from online trading from Day One.




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               The Basics To Online Day Trading

Access to the Internet has brought with it a whole new group of interests and
fads that previously simply were not available to most people. In the world of
online stock trading, this has been the explosion in popularity of online day
trading. So, what is online day trading all about?

The basics of online day trading
In almost all cases, online day trading means that you buy and sell the same
stock on the same day. As a result, it is a fairly intense form of online trading
and possibly the most risky type of stock trading for new traders to be
involved in.

The rules of online day trading
Because of the nature of day trading there are basically three rules that all
day traders need to follow if they want to stand any chance of making any
money from online day trading:

# 1: never keep a stock overnight: because of the high risks involved, day
traders should never keep a position after markets have closed. Unless the
day trader is absolutely convinced he has a breakout stock, he has to close all
his positions at the end of the day.

# 2: don’t be afraid to cut and run: to stay in the game and stand any chance
of making any money, day trader have to accept they may need to cut and run
quickly if a stock is falling. Keep in mind, when you are day trading every
minute makes a difference.

# 3: never day trade penny stock: by nature the margins between bid/ask
spreads in day trading are small. If you day trade stock worth less than $10-
$15, you are not going to be making a profit.

Trading strategy
As with long, medium and short term online stock trading, online day trading
requires the trader to makes use of stock trading charts and analytical
indicators if they want to make sure they stay ahead of the game. Indeed,
with online day trading a day trader needs to ensure that they make use of


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every additional leverage they can if they wish to have any chance of making
a profit at the end of the day.




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            How To Undertake Free Online Trading

In most cases, as in the real world, trading stocks via the Internet using a
broker will incur commission costs. Having said this, unlike trading through a
broker in the real world, trading online usually incurs much smaller broker
commission – and, indeed, in some cases, you can even manage free online
trading.



Free trading using a broker
The world of online stock trading is now extremely competitive. Consequently
there are a large number of businesses that advertise their online Internet
brokerage capabilities, but there are still only a limited amount of customers.
To try and entice your business away from other online brokers, some brokers
now offer a period of free trading online if you subscribe to their service.
Thus, one way you can cut out brokerage charges, and trade free of brokers’
commissions, is to sign up for one of these services.



Monthly trades
Not strictly speaking a ‘free’ trading services, but if you think you are going to
do a large amount of online trades in any one given month, you may want to
consider signing up for a brokerage house that offers you ‘x’ amount of trades
per month in return for you paying a monthly subscription fee to the
brokerage. This way, if you calculate your monthly trades carefully, you can
make sure that you get a certain number of trades each month for free.
However, you do need to be careful, because if you then only exercise a small
number of trades in any one given month, the monthly commission fee
structure could back-fire on you and you’ll end up paying a higher premium
commission for your online trades.



And finally…



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The world of online stock trading is growing rapidly every day. As such, very
good benefit packages are available to new customers. You may find
brokers’ sites that do not offer commission free trades, but do offer free use of
their stock trading software. Conversely, you may find brokers’ sites that offer
trial periods with no commission, but then charge for use of their stock trading
software. What you then need to determine is which service will better meet
your long-term needs. Finally, to find the best overall package to suit your
needs, you need to do your homework and research the services being
offered. In other words, you should not be picking the first brokerage service
you see.




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 How To Be A Successful Online Stock Trader With An
              Online Trading System

Whether you are trading stock using a stock broker in the real world or on the
Internet, the difference a couple of seconds makes really can be the
difference between you making vast sums of money, or losing all you have!
As a result, if you really want to be a successful online stock trader, you’ll
need to ensure you not only have an online trading system, but that you also
stick to it.



Type of investor
Before you can decide upon your trading system, you need to decide what
kind of stock investor you wish to be. By and large, the longer you decide to
invest in a stock, the easier your trading system should be. That’s not to say,
however, that you don’t need to keep a careful eye on your investments,
merely that you may not need to adapt technical analytical investment
systems that short-term and day traders may incorporate into their trading
strategy.



Analytical indicators
Having decided which type of investor you wish to be, the next important step
is to understand analytical indicators (also known as ‘technical’ indicators). If
you are new to online stock trading, a first look at an explanation of analytical
indicators may be scary. However, keep in mind that these systems have
been tried and tested by professional investors over many years, so it is worth
learning how to use them. To assist you, the main types of analytical
indicators in use today are:


    •   Bollinger band: named after its inventor (John Bollinger), this system
        uses 3 band-lines to track stock price fluctuations: an upper, centre and
        lower, which should help you to determine whether the stock price is
        rising, falling, or staying flat.



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   •   Candle stick trend reversal: uses a chart by the same name to help you
       determine whether you should be buying, selling or holding stock.

   •   Moving average: uses a stock price/time series technical indicator to
       determine whether to buy or sell a stock.

Finally…
Regardless of whether you are going to be a day trader, short-term investor,
medium term investor, or long-term investor, each of these different types of
trading systems can help you decide what the best online stock investment
strategy is for you.




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       What Do You Need From Your Online Trading
                      Software?

If you are new to online stock trading then the thought of what you need, and
should expect, from your online trading software can be very scary. To help
you, the following are some pointers you should be looking out for:

Stock Charts
If you are going to stand any chance of having a successful career as an
online stock trader, you’ll need to make sure that your software has the
capability of producing stock charts. The most common types of stock charts
in use are:

   •   Line charts: This is simply a line connecting stock price over a period of
       time.

   •   Bar charts: a little more complex in that the information not only
       consists of stock price movements over a period of time, but will also
       include the opening, high, low and closing price of the stock for one
       particular day, from which you can construct a bar chart.

   •   Reference chart: which track both the stock price and trading volume,
       which is then used to plot where the stock price should go.

   •   Candlestick charts: uses the same information that bar charts do, but
       displays the information differently.

Technical indicators
Along with your stock chart, your software should also have the capability to
use the information you input to produce what are known as technical
indicators. In short, there are currently 8 different types of basic technical
indicators that traders use – each of them having their own good points, as
well as bad. The type of technical indicator you incorporate into your trading
strategy will depend on the type of online stock trader you wish to be.
Nonetheless, it is best practice to ensure that you have all, or as many, of the
different types of technical indicators made available as part of your software
package.


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Real time stock ticker-tape price
 The importance of making sure you have real time stock ticker-tape prices
    made available to you as part of your trading software cannot be over
emphasised. Suffice to say that if you have a delayed stock price showing on
your screen, you may well have missed your window of opportunity to sell at
 maximum profit. This is so even if the delay is only a matter of a couple of
 minutes. As a result, always make sure that any trading software package
  you have, whether free or purchased, relays the stock trading price in real
                                    time.




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       The Benefits Of Online Stock Market Trading
Regardless of whether you’re an experienced stock trader or new to trading
stock, you may never have experienced the joy of stock trading online. If
that’s the case, and you are currently thinking of trading online, you may want
to know what all the fuss is about! To help you understand, the following are
just some of the benefits of online stock market trading:

Commissions
One of the biggest, if not the biggest, benefit of trading stocks online is the
reduced stock broker commissions you’ll be expected to pay. In most cases,
when trading stock online, brokers will charge you a commission of between
$7 and $10 per trade.     However, if you trade in sufficiently large enough
volume, it is possible for you to negotiate with your broker so that these
brokers’ fees can be as low as $0.01 of the transaction value.

Control
When you use a broker in the real world you may find that your broker will not
agree to execute a trade, believing your decision to buy or sell the stock in
question is flawed. When you trade stock online this is no longer a problem,
your broker has no input as to when you buy and sell stock – you do!

Portfolio
In the real world some brokers will not buy certain stock – for example, some
penny stocks. This may limit the stock you are able to have as part of your
investment portfolio. However, when you trade online, subject to availability,
you can trade in any stock - on any stock exchange - you want!

Information
With the use of computer software programs, you can use stock charts,
technical indicators and real time stock prices to help you make the
investment decision you want to make, when you want to make it.

Time
One of the essential elements about trading stock is the time it takes to
execute the trade, as this can mean the difference between making a profit
and making a loss. In the real world you have to phone your broker and ask


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him to sell/buy the stock. The broker then phones the trader, who gives the
broker the price. The broker than tells you the price and you either agree to
buy/sell or not to. If you agree to buy/sell, the trader then phones the order
through to the trader. Online you push your mouse over a cursor and press
buy/sell. A much quicker sell!

Volume
Assuming you are happy paying the commission, you can trade as large or
small as you want over the Internet. In the real world, most brokers require a
minimum buy/sell that is out of the reach of most individual traders.

Finally…
All in all, online stock trading is about ‘you’.     It provides you with the
opportunity to trade in stocks without having to pay large commissions while
keeping control over your investment decisions.




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            The Best Way To Learn Online Trading

If you are new to the world of online trading, you no doubt want to learn the
best way to trade before you commence your online trading career. So if,
here are some easy tips on the best way to learn online trading.

Simulation trading
Before losing any of your hard earned money in the real world of online
trading, possibly the best thing that you can do is to spend some time
‘shadowing’ the market by way of trading online using simulation program.
Online simulation stock trading programs allow you all the thrills and
excitement of trading in the real world, only no real stocks are being trade –
thus, no real money can be lost.

Learning in the artificial world of simulation online stock trading still allows use
full or limited access to online trading software programs, so you can get use
to the look and feel of the program before you have to venture out into the real
world of trading online.

Small trading
If you crave the excitement and thrill of a real stock trade, but do not feel that
you are sufficiently proficient in stock trading to bet the house on a trade, then
your best bet is to do some small trading first. Fortunately, one of the main
benefits of online trading is the fact that no buy or sell order is too small. As
such, you can learn to stock trade by giving small orders until the day comes
when you feel sufficiently well trained at online stock trading to move on to
bigger trades.

Shadow trade
Another great way to learn how to stock trade online to shadow what other are
doing in the market. You can do this by learning to use stock charts, such as
the bar chart, which provide you information about the opening price, closing
price, high and low trade prices, and volume of stock traded. Keep in mind,
however, that unless you know what you are doing shadow trading can lose




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you money as easily as it can make you money – so start small. That said,
this is a fantastic way to learn the value of stock charts and stock indicators.




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     5 Tips On How To Find The Best Online Trading
                        Broker

Unfortunately, the recent boom in popularity of trading via the Internet has led
to a vast increase in the number of web-sites offering online brokerage
services. Therefore, to make sure you find the best online trading broker, you
need to be asking yourself the following 5 questions:

1. Does the broker charge commission?
Before you even ask the question, the answer to this question is likely going
to be “yes”. However, two things you should keep in mind: (1) not all brokers
structure their commission fees in the same way; and (2) because a broker
advertises the cheapest commission does not necessarily mean that they are
the right broker for you. What you need to make sure happens is that you get
a good combination between finding a broker who will offer you a service
tailored for your needs and one that charges you a fair commission. For
example, if you are not experienced in online stock trading, you may wish to
consult with brokers in the real world – get their advice on where the market is
going. If that’s the case, expect to be paying more in commissions.

2. Does your broker offer real time stock prices?
This is crucial, if the broker is not offering real time stock price quotes than it is
probably better that you look elsewhere.          Knowing what price stock are
trading at, at the exact moment you exercise a buy/sell order is a fundamental
need if you want to stay ahead in the game of online trading. So either make
sure you have access to real trading prices some other way, or make sure
your broker gives you this.

3. Does your broker provide you with online trading software?
Nearly all online brokers offer their customers access to some form of online
trading software these days. The big question is: do you have to pay for it? In
some cases you do not, but the commission charged in a trade is higher. In
most cases you will have to pay for the software program, but the monthly
subscription should be less than a single trade commission – and easily worth
the money.


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4. What’s the web-site layout like?
An online broker’s window to the world is his web-site. As such, if the web-
site looks professional, there’s a good chance that the broker’s service is
going to be professional. On the other hand, if the web-site looks clustered
and messy, the chances are that this is the service you’ll be getting.

5. Is there a helpline/support service?
As with nearly every service being offered on the Internet these days, you
need to ensure that any online broker you use provides you with access to a
helpline/support service. Indeed, the support offered should really be two-
fold: (1) technical support, in case you have any problems with your hardware
and/or software program that you need to be fixed asap; and (2) commercial
support, in case you want to know whether or not your broker has ever heard
of a particular stock and what the chances are of it earning you some money.




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      What Basic Online Trading Service Do I Need?

When you use the services of a stock trader in the real world, you usually find
you have to pay high commissions in return for investment advice.           With
online trading, however, the services you need your stock trader to provide
are different. To this end, the following are some of the basic online trading
services you need in order to have some chance at a successful trading
career:

Immediate access to market
Before you sign any service agreement with your online stock broker, you
need to make sure that the services being provided includes an immediate
access to market. One of the greatest benefits of Internet stock trading is the
fact that a trade can be executed instantaneously. If, however, you find that
once you instruct your broker to buy/sell a stock, there is a time-lag while your
broker instructs a third party to buy/sell the stock, this facet is lost.

Technical support
The very nature of trading via the Internet necessitates technical equipment,
such as hardware and software programs. It could, potentially, be a major
disaster to you if not having access to the Internet (because your Internet
server was down) meant you could not make a trade. As such, you should
ensure that your online broker offers you some form of technical support in
the case of a major problem. Moreover, where possible, you should be able
to instruct your broker to make a trade via the telephone, using a secure
password if need be.

Analytical support
Many Internet stock brokers do not offer their clients access to analytical
support. By this, we mean that it is up to you to research which stock you
wish to invest in and how you wish your investment portfolio to look.
However, some online borders do offer this type of service, so if you are new
to Internet stock trading, or if you do not have access to an independent
financial advisor, you may well benefit from the provision of this additional
service.


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Exchanges
You may well find that your chosen stock investment portfolio includes stocks
listed on several different bourses. However, some online brokers only offer
access to one specific stock exchange. In such a case, unless you want to
complicate your stock trading by having accounts with several different
brokers, you may wish to opt for an online broker that offers you access to a
number of stock exchanges around the world.

In any event, before you sign any service agreement with an online stock
broker, make sure you read the agreement carefully to determine exactly what
services you are going to be offered and how much it is going to cost you.




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    All About Day Trading: An Online Trading Review

If you are interested in new phenomenon of day trading, the following is a
brief online trading review:

Overview
Basically you can day trade online in one (or both) of two ways:

1. over the Internet using an online broker’s web-site;

2. using a special piece of software known as Direct Access Trading.

Online broker’s web-site
As with all forms of online stock trading, day trading by way of using an online
broker’s web-site provides you access, via the Internet, to day trade. In order
to execute a buy/sell trade, you need to have access to the broker’s web-site
and you need to be logged-in to your account. Provided this is done, you are
free to trade.

Direct Access Trading
Unlike day trading with an online stock broker, when you day trade using a
direct access trading program you are making use of a special piece of
software that instructs a trader on the floor of your chosen exchange to
execute the trade. As no broker is used, the system is known as ‘direct
access trading’.

Online broker vs. Direct Access Trading
Before you can decide whether or not you should be day trading using an
online broker or the Direct Access Trading system, you need to think about
how much (in money and volume) day trading you expect to do. The reason
why is because there are certain benefits to both systems. For example,
Direct Access Trading is faster than using the services of an online broker.
However, using an online broker is considerably cheaper and, provided you
are always logged-in to your account, is not particularly slow. That said, with
day trading, the difference between making a profit and loss on the day can
come down to a matter of seconds.



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The second aspect you need to give careful consideration to when making
your decision as to whether you should be day trading using an online broker
or the Direct Access Trading system is the level of commissions you’ll be
paying. If you are intending to be a large trader, typically the commissions
using the Direct Access Trading system are cheaper.         However, as the
provision of Direct Access Trading software also comes with a monthly
subscription fee, for those not intending to exercise large volumes of trades,
this can be an expensive way to day trade.

Finally…

Whether you decide to use the services of an online broker or a Direct Access
Trading system provider, with the speed in which day trades need to be
executed either is more preferable than using the services of a conventional
broker.




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   The Three Types Of Online Trading Accounts (UK)

In the UK today, both specialist online stock brokers and conventional stock
brokers offer customers the chance to open online accounts. However,
before you can start trading shares in the UK, you need to make sure you
have selected the right type of account from the three types of online trading
accounts available:



1. The nominee stock account
Without doubt, the nominee account is the most common type of online stock
trading account used in the UK. The structure of a nominee account is such
that once you buy stock no stock certificate is issued to you in person.
Rather, your online stock broker will hold the stock in a nominee account on
your behalf. As such, assuming you use a normal nominee account structure,
the company register in whose stock you hold will not show you as owning
any stock, but, rather, will show the name of your broker as being the
stockholder. He then holds the stock on your behalf, in a trust relationship,
until such time as you instruct him to sell the stock. If this type of structure
does not suit you, you can arrange for your broker to open a ring-fenced
nominee account. In such a case, the company will be informed of the name
of the person who owns the stock and your name will show in the share
register. If you intend being a long-term investor, the latter of these two types
of structure may suit you better. On the other hand, if you intend to only day
trade, the former would more likely suit your needs. Either way, you will not
receive a stock certificate with this type of account.



2. The certified stock account
If you open a certified stock account, then your online stock broker is required
to send you the stock certificate for your safe-keeping, once you have bought
shares. Likewise, once you decide to sell the stock, you must send the stock
certificate to your stock broker.




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3. A Crest sponsored stock account
The governing regulatory authority of the stock exchange in the UK is the
London Stock Exchange (LSE). The Crest sponsored stock account is the
system promoted by the LSE. Crest is the stock dealing system used by LSE
and it is possible to open an account with Crest to hold your stock certificates
on your behalf. Once you instruct Crest to buy or sell stock, your account
details in the Crest system are automatically updated. As such, the upside is
that you do not have to use the services of an online stock broker. The
downside, however, is that you will be charged an annual fee for this service
and, depending on the type of investor you see yourself as being, it may not
be worth your while as this annual fee could easily eat away at any profit you
make on your share dealings during the course of the year.


Once you have decided on what type of online stock broking account you
want to open in the UK, provided you have access to the Internet you are free
to set out trading.




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                24-Hour Online Trading (Canada)

One of the greatest assets the Internet has is the fact that it never closes. In
short, access to the Internet is immediate, it’s available 24-hours a day, and
it’s available 7 days a week. Why, then, would you want to limit the you’re
your money can be working for you by opening an Internet stock trading
account that only gives you access to a stock market that is open for a mere 7
or 8 hours day? With a 24-hour online trading Canada account, this need not
be a concern.



Overview
Stock trading 24-hours a day in Canada can be achieved by use of an
account that literally follows the markets as the open around the world,
allowing you to trade online in each geographic area during the time the stock
exchanges are open there.



Asia-Pacific
Unlike other online brokers, most Canadian brokers provider their clients with
access to the markets in Japan, Hong Kong, Singapore and Australia.



Europe
Markets normally accessible to Canadian online traders include the markets in
London, Paris and the DAX. Additional markets, in Rome and Scandinavia for
example, may also be accessible.



Americas
Fortunately, nearly all providers of online stock brokerage services in Canada
offer clients access to both Canadian and US markets.




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Make Your Money Work For You Even While You Sleep!
Because of the vast range of markets that Canadian online stock brokers
make available to their clients, it is quite easy to make sure that your money is
working for you even when your are asleep by diversifying your investment
portfolio across a numbers of different stock markets. Moreover, in most
cases buy/sell instructions for markets outside of Canada will not incur any
higher commissions and/or fees than instructions to buy/sell stock listed on
Canada’s stock exchanges.



Be careful though…
Finally, a number of stock markets around the world may trade slightly
different to the manner in which markets in North America do. This is
especially the case if you decide to trade in emerging markets in Asia or
Eastern Europe. As such, if you decide to use your Canadian online stock
brokerage account to trade in these emerging and/or different types of stock
markets, please make sure that you have researched these markets at least
as well as you did when you were doing your homework on your domestic
markets.




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                  Trading Penny Stocks Online

The growth of online stock trading has, in part, been due to a growth in the
number of people who wish to trade in penny stock; but, as the margin for
profit is small, they also do not want to pay high brokerage commissions. In
such a case, the investor has found the exact service s/he is looking for with a
penny stock online stock trading company.

What are penny stock?
Generally, penny stock is stock in companies: (1) where the value of the stock
being traded is less than $5 per share; and (2) the value of the company
whose stock is being traded is less than $4 million. Having said this, a true
definition of ‘penny stock’ does not exist and so some investors/brokers
believe the value of a penny stock should not exceed $1 per share.

Why would you want to trade in penny stock?
Although there are a number of inherent problems with trading stock with a
face value as low as that of penny stock, one of the principal reasons why
they are so popular is because, in most cases, the penny stock being traded
is in a new company. As a result, although you could be trading a penny stock
today, you may well be a stockholder in the Microsoft of tomorrow. Keep in
mind that less than 20 per. cent. of the Fortune 100 companies today were
Fortune 100 companies 50 years ago!

How do you open a penny stock account?
If you are interested in trading penny stock you need to find an online broker
who is willing to provide this service. As all penny stock are traded at Over
The Counter service centres (OTCs), not all online brokers are willing to do
this.

Once you have found an Internet broker willing to take your buy/sell order for
penny stock, all you need to do then is to open your online stock broking
account in exactly the same way as you do with any other trading account –
by completing the online application form.




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      Some Myths Of Discount Online Stock Trading

If you are currently looking to invest in stocks via the Internet, one reoccurring
theme you’ll no doubt have come across is the number of discount online
stock trading services being offered. If so, be careful: some of these discount
offers may not be as good as you were led to believe:

Set-up fees
Previously a more common way of charging you extra in return for offering
discounted commission fees, the charging of set-up fees for opening your
online stock brokering account is now a less common trait. However, do keep
in mind that previously this was a very common method used by Internet
brokers of getting extra money out of their customers.

Annual fees
Still fairly commonly used today, a number of discounted Internet brokers
provide discounted commissions to their customers while at the same time
charging them an annual fee for operating their account. However, add the
annual fee charge to the commissions they pay over the year, and suddenly
the customer is not getting quiet the discounted service they originally thought
they were for stock trading online.

Third party costs
Some internet brokers use the services of third party traders to execute online
stock trade orders. In some cases, the third party will take a fee from the
trade before passing on the balance to the requesting broker. However, as a
customer of the broker, and not the trader, you may not be made aware of the
fact that there has been a third party fee levied against your trade. It is,
therefore, vital that you ensure your discounted brokerage fee is the only fee
being imposed on the trade and that there will not be any additional fees.

Interest on balance
Let’s say you exercise a sell order without exercising any corresponding buy
order. The net result of this may be that you have excess cash on your
account. Rather than depositing this to a bank account you may elect to keep



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this on the account until you next decide to buy stock. The question is, are
you being paid interest while the money sits on deposit with the broker? If
not, has the broker offered to sweep the balance to a money market account
so that you can be earning something during this time?

...And finally

Keep in mind that although you may be getting discounted commission fees: if
you are also losing the opportunity to make money, is it really worth it?




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             Tips On Online Trading Comparison

Today there are literally thousands of brokerage companies around the world
offering Internet stock trading services.      With such a maze of service
providers, how do you navigate the minefield to ensure you pick the best?
The answer is to keep the following tips on online trading comparison in mind:

What is it you want?
Before you can set your mind to the task of selecting a broker you first need to
ask yourself what kind of services you want or expect from your designated
broker. For example, do you only want to have the ability to trade via the
Internet, or would you also like to be able to trade over the phone? Likewise,
are you looking for a broker that will provide you with tips on which stocks to
buy, or are you happy doing the research by yourself? Keep in mind that one
very important question you need to be asking yourself is what you expect to
get from your online stock trading software.

Once you have made a list of what you consider your bare minimum
requirements you then need to make a second list which sets out what your
additional needs are, but which you may be willing to be more lenient on. For
example, is the commission you are going to pay extremely important to you,
or are you willing to pay a higher commission in exchange for more facilities
being made available to you?

Comparison table
Having determined what your basic needs are and what your preference are,
you can then draw up a table with the issues along the top and the names of
online brokers down the side. Square these off into a chart and then start to
visit the websites of each of the brokers on your chart. Once you reach a new
website, review the terms and conditions of service and see how may of the
services being offered by that broker meet with your needs. Once you have
visited all of the brokers on your chart you’ll have a nice comparison table of
the services being offered by Internet stock brokers.



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Making a decision
If, having collected all the information you need in your comparison chart, you
still find that there are several brokers offering services that meet some, but
not all, of your needs; then your decision may well need to come down to a
weighted index chart. To this you know need to decide the exact priority of
your online brokerage needs. Once you have done that you should then be
able to see how many of your most important needs each of the brokers meet.
Once that is complete you should have some idea of which online stock
broker is going to be the best at meeting all of your Internet trading
requirements.




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            The Value Of An Online Trading Course

Ask yourself a question: “what is a bid price?” If you do not know the answer
to this question, then it is highly advisable that you consider taking an online
trading course before you start your career as a stock trader. Moreover, even
if you do know the answer to the question, with the amount of jargon and
technical analysis involved in online stock trading, and with rapid
developments in this area resulting in changes all the time, you may still want
to consider either taking a course for newbies or, even, a refresher course.

What to expect – the basics
Stock trading is full of jargon. There’s the bid price, the ask price, the spread,
stock charts, candle stick charts, a Bollinger band, moving averages, and
even Candle stick trend reversals. And that’s just some of the jargon you’ll
come across. Taking a course means you’ll learn what all of these basic
terms mean so that you’ll not be thrown off balance if someone mentions
some obscure phrase to you.

Technical training
Most stock traders today make use of very highly evolved technical indicators
to help them determine whether or not they should be buying, selling or
holding their stock. At first glance these technical indicators can be very off-
putting. However, with only a small amount of technical training it won't be too
long before you know how to make the most of this extremely useful
information.

Reading charts
Having access to information is crucial if you are going to be a successful
trader/investor. However, there is a vast difference between having data and
having information. In the case of latter, not only do you have the data you
need, but you also know how to apply that data so that it becomes useful
information. One way to do this is to have the ability/skill to read stock charts.
Nevertheless, without adequate training, you’ll not be able to develop these
skills and, in all likelihood, you’ll not be maximising your profit potential.



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How to become a successful investor
Finally, if you select the right online training course, you should also receive
some very helpful hints, from people with lots of previous experience, on how
to become a successful Internet stock trader.




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         What Is The Real Cost Of Online Trading?

Whenever you read about the benefits of online stock trading, one of the first
things that is mentioned is how cheap it is to trade via the Internet. However,
you may well be asking yourself: “if trading stocks online is so cheap, why
isn’t everyone doing?” So, what is the real cost of online trading?

Small stock trader
The fact is, most of the first group of online stock traders were individuals who
didn’t trade in large volumes.     Under these circumstances, online brokers
charged their customers a small flat fee for their trade, but did not put a
minimum buy/sell order on the transaction. In other words, every time a trade
was done, the online broker charged their customer a fee of between $7 and
$10. Given that most trades were valued in the region of between $500 and
$1,000, while the commission was indeed low, when compared to a broker in
the ‘real’ world, as a percentage of the trade value, it was enough to
compensate the broker for the level of work done. Everyone was happy – and
this commission structure is still popular today.

Large stock trader
As the phenomenon of online stock trading took off, many traders who would
otherwise have traded using a real life broker saw the benefits of online
trading. Not only were the commissions cheap, but you could also exercise a
trade in a matter of seconds, rather than minutes. With the rise in popularity
of large stock trading online, brokers imposed either monthly subscription fees
for a certain number of trades (for example, $75 per 100 trades), or smaller
commission fees based on the value of the trade (for example $0.01 of the
trade value). Obviously this increased the real cost of stock trading via the
Internet; however, the commission charged by online brokers is still
considerably cheaper than that charged by other stock brokers.

The real cost
Overall then, the real cost of trading via the Internet will very much depend on
the amount of shares you want to buy/sell, and the number of transactions
you wish to do in any one day or month. Having said that, most online stock


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brokers have now adapted their commission structures to suit the needs of
their customers – whether they be small or large volume stock traders.



I hope you have enjoyed this introduction to trading! Remember to sign up for
the free bonuses at the start of this newsletter.




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