Facts About Using Online Trading Services
Since the early 1990s, online trading services have blossomed to provide broad access to trading systems and networks previously available only to institutions, making investing and even day trading strategies viable for some individual investors.
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Types of Online Trading Services
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Online trading services range from full service brokerages to simple stock quoting services. Full service brokers offer advice and a wide range of investment tools. Discount brokers sometimes provide little more than trade execution and quotes.
Deposit and Suitability Requirements
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Online trading services and the Securities Exchange Commission (SEC) may require investors to meet capital, income, or deposit minimums for trading. Margin and day trader accounts can have substantial requirements, while others may be opened with as little as $50.
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Commissions and Fees
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Major costs related to online trading services typically revolve around trade commissions and transaction fees. Discount brokers tend to be highly competitive, with considerably lower commissions and fees.
Quote Services
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Most online trading services provide access to both delayed and real-time quotes. Delayed quotes are often free, while real-time quotes, such as RealTick Level 3, may cost hundreds per month.
Initial Public Offerings (IPO)
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Obtaining shares of a company's IPO usually requires a large or active trading account at the underwriting investment bank. OpenIPO is one online service providing equitable access to some IPOs, however.
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