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Share dealing is done by post, by phone, or online. Internet trading is currently the most popular as it's the cheapest way of dealing and it offers the most convenience. Brokers offer accounts, with varying levels of service depending on how much an investor pays.
Execution-only accounts are for those investors who know what shares they want to trade. Given that these accounts require no advice from a broker, they are the cheapest. An advisory service is one offered by private client stockbrokers where the broker will give recommendations as to shares investors should buy and sell. Discretionary services completely control one's portfolio. The investor gives the stockbroker the authority to deal shares on their own, within set parameters. It's the most expensive option and is usually reserved for wealthy investors – those with £50,000 or more.
Types of Service
Brokerages offer various types of share dealing services. For example, some let investors place a price limit for buying and selling shares. Some brokers charge for these limit orders, while others do not. Some brokers allow for orders "out of hours," with the deal being placed as soon as the market opens. Also check if a broker deals in foreign shares, as not all of them allow it. And always read the small print.
Share dealing online is execution-only. Most brokers will hold an investor's shares in a nominee account on their behalf. Investors receive no documentation; instead the broker keeps the papers unless the investor needs to take some action. Dividends are automatically placed in the investor's account. Many online brokers charge an administration fee to handle this paperwork, though some offer it for free.
Batch dealing is a service for smaller investors. An investor puts in a buy or sell order, which is then lumped together with many other buy or sell orders, and they are all put through together. This dramatically reduces the costs, but the investor won't know the price of the shares until the deal is done.
Price of Share Dealing
An investor can start basic trading at less than £6, though they should be wary of deals that seem too low. Investors should always compare prices of all the options, whether it be basic trading, a frequent trader service, or others. Investors should also ask if the broker charges for moving one's account to another firm. And don't forget about the 0.5% stamp duty when one purchases shares.
Modern share dealing is extremely accessible thanks to the Internet. Small investors can handle their portfolios independently, though help is available if they require more advice.