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The Internet is the easiest, cheapest, and most efficient way to deal shares. Many brokerage firms offer online sharedealing through execution-only accounts. They often include charts and educational tools to help investors learn on their own.
An execution-only account is one in which no advice is given; the broker merely executes the investor's decisions. The vast majority of online accounts are execution-only as it's the cheapest and the most common type.
Setting up an Account
To begin, an investor must register and transfer money into their account. Various brokers have different processes for this. Some allow investors to fund an account with a debit card while others require a cheque to be mailed in. The more the process is based in paper, the longer the wait times. Some take as long as two weeks to set up, whereas others can take ten minutes.
As a means of enticing new customers, many online brokerages offer a lot of free delayed financial information so that investors can model their ideal portfolios before committing actual money. Once they have committed money, investors can access real-time financial information like analysts' earnings forecasts, company news, and so on.
Share prices and market indices may be delayed by 15 minutes in order to avoid paying for 'live' prices. But if investors want to pay an extra monthly charge, they can get real-time share prices and business news. Frequent traders are also offered this service.
How to Trade
When an investor has settled on a share they want to buy, they type in the share code. The system will display the current best price and the investor has a certain time limit to decide to buy at that price. If they accept the deal, the share is traded instantaneously. Not all online brokerages offer instantaneous trading, though the trend is in that direction.
Online sharedealing is cheaper than other dealing because it cuts out the middleman. Deal charges can be £10 or below, but investors can expect to pay £15 to £20 for a £1,500 deal. Online brokerages are trending toward flat fees rather than percentages. On top of these charges, many will charge a yearly or quarterly administration fee to cover the costs of paperwork.
These days, an investor doesn't even need to be at a computer for their online sharedealing; they can use Internet-enabled mobiles or personal organisers that use Wireless Application Protocol technology. Online sharedealing has given investors more access and control than ever before, yet another trend that is expected to continue.