A step by step guide to using your online share trading account
In putting together this generic guide to placing an online buy or sell order we have looked at the most popular sites including Barclays, NatWest, Hargreaves Lansdowne and Halifax.
A review of the various internet stockbrokers can be found later in the section. So, you've deposited some cash into the share trading account, done your research and you are ready to place a trade.
Step 1
Decide which market in which you wish to trade.
You may have the option to deal shares in the US, or bonds in Asia. So use the pull-down menu or buttons on the page to specify.
Step 2
You will then be asked which stock you want to trade.
You may be given the option to plug in the name of the company.
Or more likely you will have to plug in the name so it throws up a unique two, three or four letter code known as the EPIC.
The Epic (along with an number of other codes) is the way computers and traders identify stock.
If, for instance, you wanted to buy shares in Vodafone, a ticker search would throw up the Epic VOD.
For BP it would throw up the tikcer BP. (the full stop in this case is very important).
Step 3
So you have selected your stock by entering its EPIC. It's now you will need to get a real-time price for the stock.
In this case we have selected BP. Presumably you have a rough idea of the stock's from some of the basic research you've done before placing your oder.
What you will be given is two prices. The first price, known as the BID, is price your broker will pay to buy your shares.
The second, known as the OFFER, is what he'll agree to sell you the shares for. The difference between the bid and the offer is referred to as the SPREAD.
This is the profit made by the primary share dealer, known as a market maker.
Your broker will buy and sell shares via a market maker who makes his money trading on the stock market.
Your broker makes money from you in the form of a commission. Market makers are employed by big banks.
Some stockbrokers also employ market makers.
For FTSE 100 companies and large mid-caps, the London Stock Exchange has done away with market makers.
Demand and supply for shares in companies is so great they can be traded electronically between investors without the need of the middleman market maker.
So, after all that, you will get what is called a quote for BP.
That is, a bid and an offer price: Bid 676p Offer 677p.
Step 4
You will then be asked whether you wish to buy or sell the shares.
Placing a buy order we would pay the higher of the two prices.
Step 5
Next step would be to specify how many shares we wanted. It is easy to go wrong here.
Be sure you don't tap in an extra zero.
It's a slip that could see you buying 10,000 shares instead of 1,000.
In our example, we are buying 500 BP shares for 677p costing £3,385 before dealing charges.
Step 6
It is very likely you will be asked in which way you want your buy order carried out by the broker.
There are several options:
A. Market Price – where the shares are bought for the best available price.
B. Fill or kill – where you ask to trade at the price quoted by the broker. If that price is no longer available, ie BP's price has since gone up, then the trade is immediately cancelled, or killed.
C. Limit – when the broker buys or sells at a price you specify.
Step 7
Normally at this point you will be able to pull up a summary of the trade you are about to make.
It will look something like this (see table)
Action Buy Quantity 1,000 Symbol BP. Price (p) 667 Cost (£) 3,385 Stamp Duty 16.93 Commission 12.50 Total 3,414.43
Step 8
At this point you should check every detail very carefully.
Make sure you are buying shares in the right company, in the correct quantity at a price with which you are satisfied.
Only when you are sure that every single detail is correct should you press the proceed button.
Make damn sure you are not making an expensive mistake, because there is no way of backing out once you have placed the order.
Step 9
You should then receive an order confirmation message, along with a reference number and the details of the trade that's just been executed on your behalf.
Step 10
For an online tutorial try these very useful links