More and more people are now starting to buy and sell shares on the internet over other methods of trading like phone, fax or post.
Buying and selling shares online is quicker, more convenient and cheaper than other methods and is great for seasoned daily traders and beginners alike.
There are several different ways in which online brokers operate. Which one you choose should depend on how frequently and in what quantities you want to trade.
Some brokers buy in real time. The advantage of this method is that you now exactly what price you are paying for each share. Most services will charge on a per trade basis for this kind of service.
Other brokers will buy and sell shares you instructed but they will group them together with other deals through the day and only sell at certain times, usually at the end of the day. Brokers do this mainly to keep their own trading costs down. The disadvantage of this is that you don't know exactly what price you are paying for the shares which could result in hidden costs or losses.
Almost all online brokers work on an execution only basis. This means that will act on your instructions to trade but not give any advice or help. Some internet based brokers will provide advice services but it goes without saying that you will be paying a lot more for the extra level of service.
When buying and selling shares online it is likely that your shares will be held on your behalf in a nominees account. This means that you probably won't receive any physical shares certificates and you will have to sell the shares with the same broker that you bought them with. You are also not likely to receive the company's reports or forecasts. The holding broker may charge a per share fee if you want to swap your shares to another dealer.
Always enquire about the per trade fee before signing up to a broker as this can vary dramatically (average about £10 per trade). You should also enquire about discounts such as quantity or regular trade discounts, and don't forget to ask if there any savings accounts or tax-free self-select ISA wrapper schemes.
There are a few places that are generally recommended to trade that have quite reasonable rates: The Share Centre has a website on which you can trade where as an alternative to a per trade fee they charge 1% of the value of the shares you're buying or selling, this may or may not work to your advantage depending in which sectors you trade. There is a minimum charge of £2.50 for buying and £7.50 for selling and fees for holding your shares (around £2.50 +VAT per quarter). Alternatively there is a Fast-Track service for regular traders for which they charge an annual fee of £75 +VAT.
Brokerline direct also have a highly commended trading website which costs £10 for the initial sign up. For trading they charge around £12 per trade, and there is also an annual fee of £10, trading on this website is in real time.
A simple search on google.co.uk for the terms 'online share trading', 'buy and sell shares online', 'shares online' or similar searches will reveal a wealth of websites who offer online trading services. However approach each website with care and compare rates across the board to ensure you are getting a competitive deal. Where ever you choose to trade you need to be aware that there is a stamp duty when you buy any shares which is currently at 0.5pc on top of the cost of dealing.
Trading shares online can be interesting and fun. If you are new to trading then it advisable to start small and not to try to run before you can walk. Watch the market and your shares regularly and only take advice from trusted sources… 'Who knows you might even get lucky and make some profit.