"Trading stocks online: how to avoid mistakes"

Long falling (bear) market, or even periods of stagnation of the market when prices almost do not move very quickly obliterate an iridescent luster from the stock market.
Online trading - the cheapest and easiest way to purchase shares, which provides investors with new opportunities to control their funds. But here, to avoid some mistakes.It all started with a curiosity quickly turned into a boom, and now it's a real revolution. An elementary way to boot a system of transactions with shares in the ordinary personal computer has transformed a multibillion business. The biggest movers and shakers on Wall Street are forced to throw in the trash basket of his brilliant business plans. Phrases such as "My broker said," changed to "I've read on the Internet." Part of this boom will soon pass. Fixation on the public stock and securities trading, of course, could not appear without due historical bull market, which led to a permanent increase in stock prices during most of the 1990s. To talk about the actions of a very interesting - and much easier to make money when stocks do nothing that grows in value. Of course, for some time, many on Wall Street can vouch that the bear market very quickly lead to the demise of online commerce. (In fact, the Internet itself at one time regarded as a fashionable fad. Many predicted that interest in the Internet quickly fade away - in other words, the interest of the 90s had to repeat the American craze for portable radios.) But all the talk gradually ceased to As year after year, companies that offer online transactions, today announced new business growth figures.
The company Charles Schwab & Co. (Www.schwab.com) was among the first brokerage firms have started to work through the Internet, and immediately otraportovala that thousands of its customers free calls abandoned and began to place their orders online. By the end of 1998 more than half of the committed transactions accounted for by the Internet, while in general the industry in one online transaction accounted for about six, perfect as usual.                                        
 As this company Gomez Advisors, an online consulting firm of Lincoln, Massachusetts, the number of online brokerage accounts reached 7.1 million dollars, whereas only two years ago the number was only 1.5 million. It is expected that by 2001 this number will reach tremendous numbers - 18 million.
As if to demonstrate once again that Wall Street can not afford to remain indifferent to online commerce, in the end of 1998 the market value of transactions in the securities market, Schwab topped similar volumes of Merrill Lynch & Co. (Www.ml.com). And if ever in the world and had a magic wand that would correctly assessed the degree of interest on Wall Street, it is nothing like the market itself. Discount brokerage firm Schwab, which barely reached its 25th anniversary, became the real king of the market. And the two companies continue to change the palm in the fight for the volume of market capitalization.The latter is exactly repeat all the zigzagging stock market, but now few people believe that online stock trading, too, will sink into oblivion. This phenomenon is, of course, affect the very depths of the soul of the investor and the latter fueled the desire to use the latest technology for fast and cheap securities transactions."Believe me the word - it is really easy - says Charles Schwab (Charles Schwab), founder of the company that bears his name. - Even I can do it, and I - the rasposledny fool." Mr. Schwab called on-line commerce, "the highest measure of service of each man." As at the time opened Hom Depot (Home Depot): "We are really a nation diy, who prefer to do everything yourself - whether it's pasting wallpaper or buying shares."
                                                                  First and foremost, it's cheapThere are many reasons that can be traded online, but the most obvious and the first that attracted the attention of investors, and is still the most convincing reason is because online brokers are obscenely cheap.E * Trade - one of the first electronic brokerage system, which really caught the attention of Wall Street, shook the stock markets in 1996, when it became the Internet, followed by a proposal to the Commission for operations of $ 14.95 dollars. And launched more than a blatant advertisement "Give your broker the ass". As well as discount brokerage firm (which offer online trading, but not advice), which like mushrooms after a rain proliferated in the mid-1970s, after the Securities and Exchange Commission brought an end to fixed commissions, online brokers have found the cheapest way both using the latest technologies to offer the same old services.
Since each brokerage firm in his own counting their commissions, then an accurate price comparisons rather difficult. Internet brokers usually charge a fixed amount for the transaction of not more than 1,000 securities transactions for more volume or high complexity provides an additional charge. Traditional brokers, on the contrary, charge a fee depending on how many shares the investor wants to sell or buy, and on what is now the market price. But even with the discounts that many of the major brokerage firms offer clients the best, commission online brokers account for half to one-tenth, and sometimes even one-twentieth the cost of services traditional brokers usually offer a complete package of services.
However, this is changing, but not because of online brokers fee increase. On the contrary, traditional brokerage firms are reviewing their pricing strategy in order to remain competitive. Even the mighty Merrill Lynch, one of the longest existing and most popular brokerage firms serving private clients, which over the years will not bypass the Internet phenomenon to their attention, now offers two types of online accounts, development and purpose of which - to stop the leakage of customers.One of these accounts offers a transaction with a commission of $ 29.95 dollars, but in the absence of consultation with the broker. Another offering any kind of transactions: the Internet, by telephone or through a broker - for an annual fee, calculated in accordance with the size of client accounts.
Currently, Schwab charges their customers a fairly high fee for the deal - $ 29.95, however, this amount is significantly less than 300 dollars, which were supposed to pay for the acquisition of customers in its traditional account in Merrill Lynch (which is still not excluded from the list of available products), say, 300 shares of the Internet portal Yahoo!. Same deal in the company of E * Trade will cost 19.95 USD (only because the transactions with Nasdaq stocks (Nasdaq), is worth more than deal with the shares, listed its shares on the New York Stock Exchange) and only 9.99 dollars for operations through the company Datek Online. And how many companies will have to pay George Brown & Company of Boston and is now owned by Bank of Chase Manhattan? A total of 5 dollars.
Traditional brokers offer a highly professional advice and financial planning in addition to the transactions of sale of shares. And it is - the trump card companies offering a complete package of services, such as Merrill Lynch and Salomon Smith Barney, they are quite capable of properly play in the battle for customer retention, online polls obzavodyaschihsya accounts. These companies put on the fact that investors still want to receive, and the need to obtain: advice and assistance of a professional broker. Company Schwab, which controls the lion's share of online business, it seems, agrees with this, too, at least in principle.Another example of how the Internet has put everything on its head: the company Schwab, who made a name for itself by offering only the performance of online transactions, and low commissions, now advertises itself on the market, in particular, the attention of customers by offering not only transactions, but also advice and help broker and comparing its package of services to those companies that still offer only the cost of the sale. There is no justification for those firms that, despite all the bells and alarms, are still offering "a little too cheap service." According to them, "this is what the customer wants." "Our customers are prepared to work in the financial markets - said Jeffrey Citron (Jeffrey Citron), the former chief executive officer of Iselin - a subsidiary of Datek in New Jersey. - And they definitely know what they want to buy."
However, not all clients are so tempted. Although even less savvy clients probably realize that even the professionals with all their skill can not always predict the fluctuations of major stock indices. So why pay for additional services?
- If you pay by 1.5 percent for each transaction of sale or if you pay 1.5-2 per cent per annum (to managed your money), but in this case you can not even earn an average profit, then how do way you can cover the cost of these intermediaries, which is really just suck money out of you? "- said Samuel Hayes (Samuel Hayes), a professor of investment and banking at Harvard University. However, this does not mean that those who prefer work independently, have chosen the right path. Left to themselves, many investors have "come out of the frying pan into the fire" in an attempt to "catch" the best and most profitable stocks, rather than buy and hold shares quiet a few of mutual funds (mostly working with stock indexes ) as the main part of their portfolio.
                                                                         A catastrophic reduction in the size of the commission was the main characteristic of the brokerage industry in recent years. At the end of 1997 the commission of E * Trade at a rate of 14.95 dollar has given way to an 8-dollar commission of Ameritrade (www.ameritrade.com), which, among other things, was accompanied by a massive advertising support. Shortly thereafter, the firm Quick & Reilly, now a division of FleetBoston Financial Corporation, a company founded Suretrade (www.suretrade.com), base commission which was only 7.95 USD per transaction. There was a lot of other sites that offer a commission of $ 10 to $ 12 per transaction, including the company Datek Online (www.datek.com) and the company TD Waterhouse Securities (www.tdwaterhouse.com).
When the commission fell below $ 10, their size has stabilized to some extent, although some companies are offering the most active traders or customers with large accounts even bigger discounts. In 1999 American Express Company even went so far that the commission offered free online trades for customers who have accounts in 25 thousand dollars or more, and in early 2000, Schwab lowered the fees for the most active customers up to 14.95 dollars. Now the fight moved into the area who can offer the best services, ie research analysts on Wall Street and the possibility of acquiring the most promising and lucrative shares in initial public offering. After that, according to research conducted by one of the brokerage firms Credit Suisse First Boston, the average size of the commission remains the same, ranging in 1998 and 1999, between 15 and 16 dollars.