How to Trade Stocks Online

Video Transcript

"How far we've come. This is Roger Groh with Groh Asset Management, and today, we're here to talk about how you trade stocks online. Several years ago, the firm, Thomas F. White & Company, now known as White Pacific pioneered the online trading business and designed the first online trading platform. That eventually became the trading platform for Morgan Stanley. Today, most banks or brokerage firms have their own online component. What you do is you sign up either in person in their branch or online. You verify who you are. You fund that account, and then through a phone call or through a computer, you identify specific stocks or bonds or other investments that you would like that firm to make on your behalf. Generally, it's done very quickly and you find out quickly whether or not you've succeeded in what you wanted to do. Advantages? Well, it's a lot cheaper and a lot quicker. Disadvantages? Well, frequently, the list of things that you can buy or sell through these websites is pretty limited. However, many of the firms have much more sophisticated websites that they will give to their higher-end investors. You either have to ask for them, apply for them, or pay for them. Once you do that, you will have access to much more product that you could buy, especially in the bond or stock side. If you're a significant institutional investor, it's well worth the money. As you think about the firm that you're going to be working with for online trading, one of the things that you have to consider is: Do you want a branch where you can physically go and talk to somebody or are you comfortable with being 100 percent based on your computer? Some firms have a lot of branches and some firms have very few. You have to do your homework. Their expenses may differ, depending upon the firm, and the commissions may differ, depending upon the firm. The quality of what they buy or sell may be different. And on their websites, what they let you buy and sell may be very different. There is one other option. On the institutional end, one of the things that you can do is you can hold your money at one firm and actually buy and sell through any other firm that you'd like. Now, those might mean bigger accounts or perhaps it means a more sophisticated software program, but as an example, you can go to bloomberg.com. They have a public website that you can take a look at and decide if you'd like to work with them. Or you can sign up with them for their more institutional type of service. It's something widely used throughout the world by institutional managers, so it's expensive, but if you're serious, it's the way to go. So I hope that helps. I'm Roger Groh of Groh Asset, and thank you very much for spending time with me."