Many new and experienced investors choose to buy stocks online. This is a quick and simple way to get started, but will require some work on your part.
How to Buy Stocks Online
Those who are inexperienced with online trading often ask, “Can I buy stocks online?” The short answer is yes.
First and foremost, you need to work with an online, or discount, broker. These brokers generally serve as a middle man or an “order-taker.” Because there are no advisors, financial planners or offices to visit, online brokers are typically the least expensive way to start your investment journey. The only interaction you will with your online stock broker is online or over the telephone.
The broker’s fee will be based on a per share or per transaction basis. After setting up your account, you can buy and sell penny stocks online with just one simple click.
Finding the Best Online Broker
When you buy stocks online, you’re on your own. Your online stock broker will not supply you with any personal advice or guidance. However, a top discount online broker may have a website with links to resources, advice and tips from trusted third party sources.
When searching for the best online broker, here’s our criteria:
Low Commissions – Commissions and other additional fees can add up quickly. If you trade often, you want to keep the commission as low as possible. Aim for $5 or less. Those who trade infrequently may be okay with a higher commission fee, but those who trade 20 or more times each month will want to opt for brokers with lower fees.
Low Account Minimums – An online stock broker may require a steep account minimum. Minimums for retirement accounts or cash accounts may not require a minimum, but margin accounts typically come with higher minimums. Keep this in mind when looking for a broker.
No Market Limitations – Look for brokers that allow you to access all markets, including NASDAQ, OTCQX and AMEX.
Reliable Trading Platform – No matter whether the trading platform is a standalone program or web-based, it needs to be speedy and reliable. Penny stocks, in particular, can move quickly, so you need to ensure that the platform can keep up. Mobile access is preferred so you can monitor your stocks.
Helpful Customer Service – When technical issues arise, there is nothing more frustrating than dealing with a company with zero customer support. Knowing that a helpful customer service representative is only a phone-call away can make a world of difference in your success and your trading experience.
Helpful Extras – While not necessary, it is nice to work with a broker that offers a few extras. Streaming stock news and links to helpful resources are nice perks that can help you make smart trading decisions.
It may not be possible to find an online broker that meets all of the criteria above. Low commissions, fast trading executions and a reliable trading platform are the most important things to consider. Although many people tend to overlook its importance, great customer service is also essential.