How to Maintain an Active Trader Program Membership

The introduction of online brokerages has made it easy for individuals to trade online for their personal accounts.

A membership to an "Active Trader" program means opening and maintaining a trading account that conducts a minimum number of trades over a specified period. Key online brokers that sell trading services, such as Bank of Montreal (BMO), Charles Schwab, or Fidelity offer "Active Trader" programs for accounts with a minimum number of trades online and maintenance of a minimum cash balance in the trading account. Opening an "Active Trader" account translates into a lower fee per trade for the user as well as access to live investment quotes and free investment research.

Things You'll Need

• Capital to invest
• Internet
• Brokerage account

Instructions

1. Open an online trading account at one of the key online brokers such as Fidelity, BMO or Charles Schwab. To open and qualify for an "Active Trader" account, you need to fill out an online application.

2. Choose the option to open an individual investment account, enter a user name/password and provide details such as your name, address, citizenship, contact information, Social Security number, birth date and employment information. Identity verification is also required. Agree to the terms and conditions of the account, which includes a credit check under your name. A minimum dollar balance in the trading account is required for an account opening.

3. Start executing trades online once your trading account is approved, including buying or selling stocks, bonds, ETFs, mutual funds and futures or options (if applicable for your specific brokerage account). Use your broker's online investment research reports, analysts and charting programs to assist with your trading decisions.

4. Monitor your investments online on an ongoing basis by logging into your brokerage account. Brokerage accounts can experience gains as well as losses and are not FDIC-insured; in other words, they are not insured against losses.

5. Enter more than the minimum trades required (based on the broker's guidelines) to keep the "Active Trader" status. Most online brokers also require a minimum cash balance be maintained in the account. As of 2010, BMO requires a minimum of 30 trades per quarter for the "Active Trader" account, while Charles Schwab and Fidelity require a minimum of 36 trades for the year for their "Active Trading" accounts.

6. Pay all online brokerage fees on time to keep your trading account active, such as individual trading fees and account fees.

Tips & Warnings

• Brokerages often charge extra fees for foreign investment transactions or for trading orders over the phone (rather than online). Read the fine print of your trading account agreement carefully so that you understand the fee structure and any restrictions on the account.

References

• BMO: The Active Trader Program
• Charles Schwab: Active Trading (Pricing Guide)
• Fidelity: Trading Online at Fidelity