UK Stock Market, UK Stock Tips

Changes in technology have brought about significant change in the way investors used to invest in securities market. Today internet trading has made great inroads and completely changed the traditional brick and mortar model of stock trading. Internet trading has gained popularity amongst all classes of investors be it big or retail. The ease and convenience of placing your buy and sell orders for execution and getting an online confirmation without having to move out of your home or office is simply great.

Let us have a look as to how to begin in the field. First of all, you need to open a broking account with a broker providing internet trading facility. Today many brokers provide trading facility through internet. All these brokers are also depository participants (DP) and have a tie up with banks so that your three accounts viz broking, DP and bank are all interlinked. When you put a buy order, there is a seamless fund transfer from your bank account to the broker account and in case of execution of your sell order, shares move from your DP to the broker online. You also get a direct credit of money to your bank account in case of sell transaction and credit of shares in your DP account in case of buy transaction without having to worry about paper work and other inconvenience.  The ease of doing it all through click of a mouse is simply too great to ignore.

Costs associated with secondary market trading
There are different costs associated with trading in the secondary securities market. You must take them into account and compare across different brokers and their services. For example some brokers only provide broking services without any add on such as research or recommendations. Generally the brokerage charged by a full service broker is more than that charged by others. You may also need to pay DP charges, every time your make a transaction. There will be annual maintenance charges also known as holding charges for holding shares in your account by the DP. It makes sense to clarify all the charges with your broker and DP before start of trading. This way you will be able to make a decision about the costs payable to a particular broker or a DP.

You also need to put in margin money with your broker so as to allow you to trade. Some brokers may also insist on margin money before buying on your behalf. This is because brokers have to pay different forms of margin such as Value at risk (VAR) margin, mark to market margin to the stock exchanges. These margins are imposed by stock exchanges to cover their risks and to take care of adverse market movements. Brokers in turn pass on these margins to their clients.

Things to remember while trading through internet
You need to take a few things into account if you are investing through online facility of brokers. Internet seems too simple to resist. Hence makes sure that you invest only that much as you can afford to invest. So not fall prey to media hype and easy money making claims. Invest in good companies showing good results and with professional management and good background of promoters. Internet is abode of huge information and it is up to you to use information to your advantage.

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