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Swap Stocks Online

By Will Harper

Starting an online trading account is one of the cheapest ways to find out what all this stock market fuss is about. The fees charged for each trade are far less than what many traditional brokerage houses charge, and it is a far cry from adrenaline-fed hyped and derided day-trader phenomenon. Trading stocks online is no different from buying stocks through a broker, except that the broker is dispensed with. Of course, that means when you lose big, there is no one else to blame.

Starting an online trading account is simple. The major trading sites--E*Trade, Ameritrade, Wit Capital, Datek, Schwab--allow prospective customers to either apply online, download an application or request an application via snail mail. Getting on the mailing list isn't a bad idea, even if you're still undecided. Online traders will often try to woo you later with promotions, the online version of the free toaster at the bank. Now some companies are forgoing toasters completely and going straight for cash. E*Trade has recently been enticing fence-sitters by offering to deposit $75 into selected new accounts.

Stocks are about money, so of course trading companies require a minimum account deposit to get going. E*Trade only asks for $500, but the minimum is usually higher, around $2,000. More established firms like Schwab require a $5,000 minimum to open a standard web account. Investors can buy stocks, mutual funds and traditional Roth IRAs.

The major attraction of online trading is the rock-bottom prices for transactions. Datek, for instance, claims to charge only $9.99 for any stock trade up to 5,000 shares, no matter how much you make off the transaction. By contrast, traditional brokerages charge a percentage.

The downside, of course, is not getting advice directly from a professional. But there is lots of research information on the Web (www.fool.com and www.quicken.com are standards) and, as the saying goes, if your broker is so good, why is he or she still working?


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From the March 16-22, 2000 issue of Metro, Silicon Valley's Weekly Newspaper.

Copyright © 2000 Metro Publishing Inc. Metroactive is affiliated with the Boulevards Network.

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