and at least 1,000 shares traded at a minimum price of $5 per share.
To open an account, an investor must send, wire or transfer funds from other accounts to a broker. You must have sufficient funds in your account prior to placing orders. Each broker has detailed procedures on trading depending on the type of account and trades.
DO YOUR RESEARCH ON COMPANIES AND BROKERS
Investors can look to the financial exchanges themselves–Nasdaq (www.nasdaq.com), NYSE (www.nyse.com) and AMEX (www.amex.com)–for up-to- the minute information. The Securities and Exchange Commission (SEC) (www.sec.gov) also offers a gold mine for investors searching for information available via its EDGAR database. It provides information on forms public companies are required by law to file with the government, including those detailing company finances, mergers and acquisition plans.
Lee takes full advantage of the services her firm, Discover Brokerage, offers as well as other sources of information on the Internet, including The Motley Fool (www.fool.com), an online investor newsletter. She also subscribes to the Value Line Investment Survey (a year’s subscription on CD-ROM is $595) and The Technology and Stock Newsletter, based in Half Moon Bay, California.
Barnes relies on ETrade’s research and data offering but scours the Web for other information. “All the information I get on the Inter-net is free,” he says. A good search engine is Daily Stocks (www.dailystocks.com), which offers financial databases, brokerage research, analysis and projections, and provides links to magazines offering information on heavily traded public companies.
In researching online brokerage firms, potential investors should familiarize themselves with industry jargon and the kinds of features that are most important to them. Surf the broker’s Web site for detailed information on their services and prices. The Yahoo! Finance Center (www.yahoo.com) provides an up-to-date list of links to brokers. From there, you can hop from site to site comparison shopping.
Researching the types of trades and orders the firm accepts should also be on your checklist. Many firms offer a variety of trading besides stocks, including mutual funds, options, precious metals and bonds.
Most brokers, except for the rock-bottom, no-frills deep discounters, offer an array of value-added services such as news feeds, “real-time” quotes, portfolio tracking options, up-to-date charts and graphs of market and stock activity, historical data and company reports. If they don’t offer these services directly, they may offer links to others that provide the services for free or for a fee. Real-time quotes are a must when making investment decisions. Many brokers such as ETrade offer unlimited quotes, while others charge for the service.
Once you make a trade, your account information should be updated. Determining how soon this occurs and how you receive confirmations of your trade is also very important.
Free customer service is usually limited to e-mail and online FAQs (Frequency Asked Questions), but some brokers do offer telephone help for free. Check message boards and investor news groups like misc.invest.stocks to evaluate the customer service reputation of a broker. But, do not invest based on gossip and unsubstantiated rumors that spread online in chat rooms