Buying stock online

[Fuzzy McGillicuddy]

I'm looking at purchasing stock online, but I don't how to go about it.

I know which company shares I'm interested in. But I've never purchased online before, I've always used a trader. But hey, if I can reduce fees I'm all for that.

What are your experiences? Any recommendations?

[czure32]

Online discount brokerages are fairly easy and simple to use and accounts can usually be set up within a couple of days
Every financial institution to my knowledge has an online discount brokerage, and the fees will vary
Qtrade has been ranked the number one online discount brokerage by the globe and mail for 2 years in a row now, and also ranks the highest as far as customer satisfaction goes

[Agamemnon]

I find the easiest way is just to use your online banking. I do online banking with Scotiabank, I just click the "Investor" tab (I assume most online banks have this), and put the order in there. It costs $25 per transaction... you might be able to find $20/transaction sites, but given I'm already signed up with Scotia I just do it through them and eat the extra $5/transaction. The more you have to play with, or the more you trade, the cheaper your transaction costs can be.

Just realize that if you're buying/selling a stock and the transaction fees are $25, thats $50 off the top ($25 for buying/$25 for selling)... so if you're buying $200 worth of stock, you're really hurting with those transaction costs. It's really only cost effective (I find) to buy in chunks of at least $1000 (but preferably more) to reduce your transaction cost/share.

[skins]

Originally Posted by Agamemnon

...
Just realize that if you're buying/selling a stock and the transaction fees are $25, thats $50 off the top ($25 for buying/$25 for selling)... so if you're buying $200 worth of stock, you're really hurting with those transaction costs. It's really only cost effective (I find) to buy in chunks of at least $1000 (but preferably more) to reduce your transaction cost/share.

I use a self managed Scotiabank investing account as well. It's very simple to use. Most major banks will charge you $20-$30 in commission per transaction. So for a $1000 investment, to buy/sell for $25, you need to make 5% to cover the commission. That's not great, but it's not too bad either. Most banks will also charge you a yearly fee if you're balance isn't above certain amount (mine is $100/year for a balance under $20,000). Of course with the account you are given access to that banks market research, so that has some value to it.

Discount brokerages like E-trade, etc. will advertise low transactions fees like $5 per trade, but that's only if you're making something like 30 trades a month (which is a hell of a lot) or have a minimum balance.

Really, it depends what you're investment strategy will be. If you're looking to buy and hold just a couple of stocks, you'll probably find pretty standard rates across the board. I would check with whatever banks you deal with now.

Which companies are you looking to invest in? (just curious)

[dustygoon]

I am US based.

I wouldn't worry too much about commission prices as long as you are not going to trade too much (not a good idea unless you follow markets a lot to make up from all of the commissions). An extra $5 is not much in the scheme of things.

I think trade execution time is more important and good pricing if you are dealing with smaller companies that have stocks that don't trade as much. Tough to see good pricing unless you have access to live markets (i don't mean the last trade but i mean the live bid and offer to see where dealers are willing to buy and sell). The smaller and less liquid your stock, the more likely you get ripped off on pricing. You can over come this by using a "limit" on your price. If you are buying stock, set your limit to a couple pennies higher than the last trade. That way you know what you will pay and likely be able to get the trade done. Set the limit too high, and you might end up paying too much needlessly. Set the limit too low, and you might not get the trade done....stock will run up on you and you have to chase it to buy it.

I used to use TDWaterhouse but their merger scared me off when their trading systems kept going down and there were errors in my account....probably fixed now.

I switched to etrade. Very fast trade execution and prices, but they had a shakey financial position a few months back....they invested too much of their own money in mortgage backed securities and other instruments affected by credit squeeze. They got an influx of capital ($2b) but i said forget it. Deposit insurance does not extend to brokerage accounts. The brokerage insurance wasn't very strong and i didn't want to have to rely on it to get access to my cash if etrade went under.

I moved to fidelity. They have been good so far. etrade clients like me moved to them in droves.

It seems the online banks like etrade have better technology and execution and prices, but good old bricks and mortar banks tend to have stability.

[macker]

I would go with E-trade. Banks are banks and will always find ways to fee you to death! E-trade has everything you need including free research, tutorials etc. and if you have $50,000 you will only pay $9.99 per trade. Under 50K and it is still only $19.99 per trade. Also I thought I read that if you move your account from another institution you would get 100 free trades. This is a couple years worth for me as I am not an active trader and I just buy the best companies and sit on them and squeeze as much dividend/stock appreciation out of them as possible! Besides 3 out of every 4 years the market makes money so why not buy and hold as long as it is a good company. No need to pay much in transaction fees and don't pay MER's to the mutual fund managers who all seem to have the same top holdings anyways. Another very helpful tool I would recommend is Vector Vest which is an excellent way to get a handle on stock valuation.
Top reads : Peter Lynch (any of his books) Jim Cramer (kinda over hyped but there is some good info in his books) Any and all William Berstein books (esp. 4 pillars of investing, intelligent asset allocator).

[Bertuzzied]

Etrade end of story. Nothing else in canada comes even close. Not only did they give me 200 free trades when i transferred in my account but they counted those trades towards my next trading quarter. So i only pay $6.99/trade and i get the real time stock ticker thingie.

It's the same system we used when I worked for TD waterhouse.

[Agamemnon]

Originally Posted by dustygoon

I am US based.

I wouldn't worry too much about commission prices as long as you are not going to trade too much (not a good idea unless you follow markets a lot to make up from all of the commissions). An extra $5 is not much in the scheme of things.

I'd worry a lot about it... if it costs $25 to buy and $25 to sell (regardless of how much as far as I can tell), that's $50 right there... if you're only buying $500 in stock you've automatically lost 10%.

[macker]

Yep, even if E-trade went under we are covered by CIPF which covers up to 1 Million in cash or securites. www.cipf.ca Not sure what would happen in the US if E-trade went under? After Bear Stearns who knows EH!....

[Qwerty]

I cannot believe some of you are paying $25.00 per trade. I use E-trade and pay $9.99.

I have used this for years and never had any problems, they even have the cash-optimizer account where for free you can transfer your cash in there and make 3.05% on it. (I know not the best around but not bad considering usually this money just sits there when you wait to invest)

[dustygoon]

Originally Posted by Agamemnon

I'd worry a lot about it... if it costs $25 to buy and $25 to sell (regardless of how much as far as I can tell), that's $50 right there... if you're only buying $500 in stock you've automatically lost 10%.

Well you are going to worry about it almost the same amount if you find a joint that will do $20 or less commissions.....$20 is still 8%. Not sure what your point is. Yes it costs something to invest. If you want to have effective transaction costs, then buy no load mutual funds. But look out for the managers fee that comes off every year.

Anyway...it is implied in my prior post that hopefully you are looking at a decent size investment to start off with or you are looking for some outsized returns to occur. and holding it beyond a year makes that dent a little less relative to annualised returns.

[Agamemnon]

Originally Posted by Qwerty

I cannot believe some of you are paying $25.00 per trade. I use E-trade and pay $9.99.

I have used this for years and never had any problems, they even have the cash-optimizer account where for free you can transfer your cash in there and make 3.05% on it. (I know not the best around but not bad considering usually this money just sits there when you wait to invest)

Is there a minimum amount of trades you need to do in a quarter/year, or is there any minimum balance on your account? I looked up Etrade and it said you needed to make 200 trades a quarter or have at least $50k in the account. I'd be super interested in an account that had no minimum trades/no minimum balance that gave trades for $9.99.

The website says only $9.99 trades if you do 30-129 trades each quarter... which is a lot.

[Winsor_Pilates]

Good thread, I need this too. I looked at E-trade, but don't have much $$ and won't trade much. What's a good site without minimum balances and trade frequencies?

I am looking to put a few thousand into some penny stocks to start, and once that hits big, I'll go from there.

[macker]

Originally Posted by Winsor_Pilates

Good thread, I need this too. I looked at E-trade, but don't have much $$ and won't trade much. What's a good site without minimum balances and trade frequencies?

I am looking to put a few thousand into some penny stocks to start, and once that hits big, I'll go from there.

Look into Canadian Share Owner www.investments.shareowner.com
I have an account with them but have never made a trade with them. I just opened the account and it has sat idle. It was easy to set up and I think if you just had a basket of blue chips to buy you would do ok there also. I don't pay any fee's to have this account sit idle. I think the deal with them is that they only trade a few times per month and it is only a select group of stocks that you can buy with them. If the fee's are what they say they are then they are dirt cheap. I haven't pursued them as I am happy with E-trade and it is a more comprehensive service and besides there are a few bottom feeders that I buy from time to time just to keep things interesting (90-10 rule applies).....But if you are looking for a low cost option where you don't require a minimum balance then I would check it out!

[macker]

Originally Posted by Winsor_Pilates

Good thread, I need this too. I looked at E-trade, but don't have much $$ and won't trade much. What's a good site without minimum balances and trade frequencies?

I am looking to put a few thousand into some penny stocks to start, and once that hits big, I'll go from there.

Look into Canadian Share Owner www.investments.shareowner.com
I have an account with them but have never made a trade with them. I just opened the account and it has sat idle. It was easy to set up and I think if you just had a basket of blue chips to buy you would do ok there also. I don't pay any fee's to have this account sit idle. I think the deal with them is that they only trade a few times per month and it is only a select group of stocks that you can buy with them. If the fee's are what they say they are then they are dirt cheap. I haven't pursued my account with them as I am happy with E-trade and it is a more comprehensive service and besides there are a few bottom feeders that I buy from time to time just to keep things interesting (90-10 rule applies).....But if you are looking for a low cost option where you don't require a minimum balance then I would check it out!

[macker]

Originally Posted by Winsor_Pilates

Good thread, I need this too. I looked at E-trade, but don't have much $$ and won't trade much. What's a good site without minimum balances and trade frequencies?

I am looking to put a few thousand into some penny stocks to start, and once that hits big, I'll go from there.

Sorry, after reading your post again....You won't have any luck investing in penny stocks through Canadian Share Owner. They focus on large cap, tried and true, blue chips such as PCA, TLM, ECA etc. etc. and is geared more towards long term investing. If this is your first foray into the markets I wouldn't chase penny stocks unless you are willing to lose all your money. For the most part the market is efficient and you won't have any knowlege that isn't already out there and penny stocks are kinda hot and sexy I realize but you would likely do better to invest in companies that have been around for a minimum of 5 years, pay out a dividend, are products that you know and use etc. etc. Think long term and don't chase stocks just let them come to you. I invest in a manner similar to going to the horse race and betting on all of the horses. Pick the leaders in each market segment. Diversification is the only free lunch. On the other hand if you are willing to invest in a penny stock and walk away broke then go for it....the more risk the more reward (or luck)....I guess..... But back on point : I have no idea where you could invest in penny stocks without having a minimum balance and trade frequencies.

[FlamesAddiction]

Originally Posted by Bertuzzied

Etrade end of story. Nothing else in canada comes even close. Not only did they give me 200 free trades when i transferred in my account but they counted those trades towards my next trading quarter. So i only pay $6.99/trade and i get the real time stock ticker thingie.

It's the same system we used when I worked for TD waterhouse.

Sorry to bump an old thread, but the Mother of all Mondays thread sparked an interest in this subject...

A lot of people seem to like Etrade, but does anyone have an opinion about http://www.sogotrade.com/ or http://www.questrade.com/ ?

Quest trade claims to be the only ones who let you buy and sell physical gold... would this be a big selling point to use them?

[V]

My buddy uses quest trade, and has no issues with them.

[Incinerator]

I use TD Waterhouse and I'm paying $9.99 per transaction...$25 sounds pretty steep to me!

I think I saw some ads lately from ING's "sharebuilder", the ads say $4 but I'm sure there's some sort of catch in the fine print...haven't looked into it yet.

[FlamesAddiction]

Originally Posted by Incinerator

I use TD Waterhouse and I'm paying $9.99 per transaction...$25 sounds pretty steep to me!

I think I saw some ads lately from ING's "sharebuilder", the ads say $4 but I'm sure there's some sort of catch in the fine print...haven't looked into it yet.

That's why I was wondering about sogotrade.com. They only charge $3.50, or if you pay a monthly fee of $10, then it's $1.50! Can that even be right?

Can someone check the site out for me and tell me if it's for real, or if am I reading it wrong...

http://www.sogotrade.com/