A Beginners Guide To Trading Stock Online
etrade online stock trading
So you need to Buy Or Trade Shares? The 1st thing you must do if you are online, is check out online brokers like TD Waterhouse or Etrade Online Trading. Creating a new account is usually free, and once it is opened you can deposit money into your account so you can trade.
What kind of Broker?
The least expensive is an execution only broker. What this essentially means is that you are not given any recommendation on when to buy or sell the shares / trade. Their job is to offer a quote and fill the order.
Online trading Platforms
By having an account online, it enables you to purchase or sell shares mechanically ( i.e. Without human intervention in the main part ). After you make an order to sell or purchase, you usually have a limited quantity of time to accept or turn down the price offered.
How Are Costs Made Up?
Costs consist of a bid and offer, with the Mid price being the cost of the share. Most stocks have several marketmakers that set the price for the stock so they can earn cash on the spread for making a market in that stock.
For example, you could have a stock priced up at 136p with a 134p bid and 138p offer. This implies the marketmaker will purchase the stock off you for 134p and sell it to you for 138p. So in the example above you agree to buy at 138p and the deal goes thru.
Congratulations you now own shares in Company ‘X’. If you pay the full offer price, it’s also called the ‘touch’ cost.