Buying Shares – Chapter 11: Placing an order – The technicalities involved, Step 1 – Open a Share Dealing Account

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Updated: Mar 5, 2019, 13:14 UTC

This is chapter number 11 out of 19. Read the rest: Read Buying Shares – Everything that you Wanted to Know but were too Scared to Ask – Chapter 1:

Buying Shares – Chapter 11: Placing an order – The technicalities involved, Step 1 – Open a Share Dealing Account

This is chapter number 11 out of 19. Read the rest:

A share dealing account offers only the ability to purchase shares through the Internet or over the telephone. The basic service is called “Execution Only”, which means the broker does not offer any advice. They just carry out the trade as per the client’s directions. For example, giving the order “buy 2,000 shares in Google”.

Opening one of these accounts is generally free. You need to add funds from a bank account before you can purchase shares. On the other hand, open a Stocks & Shares ISA to stay away from paying tax on any stock market returns within an assured limit. This is more reasonable for long-term investing.

Normally, brokers charge around £10 or $15 as a transaction cost per trade; this has no relation to the size of the trade executed.

Your best option is to compare brokers on a price comparison website like this one http://www.consumersearch.com/online-brokers

There are other questions worth asking your broker like are they regulated? How quickly do they let you have access to your funds? Can you pick up the phone to them if your internet goes dead? Also find out how quickly they respond to you before you join them- perhaps send an email to customer support as this is a good way to test their turnaround time.

Many banks offer investment services like this one: http://www.halifax.co.uk/sharedealing/share_dealing_home.asp.

When you’ve determined which broker you will join it only remains for you to decide which companies you will buy stock in? You can feed this through to the broker directly either by picking up the phone or placing an instant order for execution through their website.

You’ll soon get used to this system of buying shares. If you don’t want to do the transaction then don’t, miss out this time, but whatever you do, don’t come back in too late under pressure as the price may have changed for the worst at this time. Never trade under pressure and don’t overtrade too.

For even more peace of mind trade using limit orders and stop losses.

Limit orders-> limiting the highest price at which you will buy at or the low at which you will sell at.

Stop Losses-> this limits how much you will lose by putting in place a stop ie. if the price of your stop drops by 10% it will automatically sell.