ONLINE STOCK TRADING

This report is prepared for E-Business by Jennifer Albanese

Executive Summary

This report is designed to assist new traders and those already trading of the differences between various companies, the companies strengths and weaknesses, some of the new technology these companies have and some of the problems associated with online trading. The report will highlight four of the top 10 online brokers and will go in-depth with their services and technologies. Online trading continues to grow more and more each day. Some of the major advantages of online trading in general include:

Extended hours of trading
Several forms of online research (public and exclusive)
Cheaper trades
Complete control of your investing decisions

Online trading has become so popular that even full-service brokers and now trying to offer some sort of online service. Investors make one out of every six trades online. The following sections will discuss four main brokers in-depth as well as wireless trading and some of the problems to be found. After reading through this report, a new user will have gained enough knowledge to make a decision and sign up for an online service.

Top Competing Websites

ETrade    WWW.ETRADE.COM

Costs:

$15

Broker assisted trades $15-$35

Resources offered: live help called Service Now!

Key Benefits: Chat rooms, message boards, real-time account info, automated performance reporting

Downfall: Three tier membership make website difficult

Ameritrade    WWW.AMERITRADE.COM

Costs:

$8 trades, no limit to number of shares traded at the price.

Broker assisted trades $12-$18.

Stop trade $5

Resources offered: Guide to Online Investing, General

Key Benefits: Customized e-mail alerts, after hours trading, good customer service

Downfalls: does not provide streaming data or Nasdaq Level II quotes

Charles Schwab    WWW.SCHWAB.COM

Costs

$29.95 or $14.95(for active traders)

Broker assisted trades $35-$39

Resources offered: Equity Report Card, Educational Learning Center

Key Benefits: Real-time account information, easily navigable website, excellent research

Downfalls: Fairly expensive trades

Fidelity Investments    WWW.FIDELITY.COM

Costs

$15

Broker assisted trades $39-59

Resources offered: Portfolio planner, Lehman Brothers research and S&P and Argus
company reports

Key Benefits: extensive e-mail and wireless alert capabilities such as price triggers and new issue offerings

Downfalls: poor customer service, limited online transaction history

Wireless Technology & Trading

Wireless trading has some great features but it is designed for more then just the average investor. This service is designed for people who make around 20 trades or more a month and are willing to pay anywhere from $60 to $90 a month. The features that you can receive via wireless depend on your service and your broker. Many people have the service simply to access data and receive alerts while others are actively trading. An additional advantage is that some phone networks such as Sprint PCS, are more secure then the general internet.

The following table breaks down various brokers and the wireless service they provide.

BROKER	ACTIVITIES/PLATFORMS	COST OF TRADES
Ameritrade	Quotes and trades from Palm wireless devices and Sprint PCS Web phones	$8
Charles Schwab	Quotes, alerts, trades. account information, and news from Palm IIIx and Vx devices (RIM pagers and web enabled phone to follow)	$30 and up, plus $55 monthly service fee
SureTrade	Trades and information from Palm wireless devices, two-way pagers and web-enabled phones	$14 and up
E-Trade	Trades, market updates, and news from Palm devices, AT&T PocketNet, Verizon and GTE Wireless phones	$15

Problems Online

Unfortunately, online investing has it's problems. With more them half a million trades made each day, bad things are meant to happen. One of the most common disaster is when the broker's site crashes. As the market is full of ups and downs, so is the use of the broker's website. When traffic on the net gets to heavy connecting to your broker can be extremely slow or not even happen. If the broker does go down the first thing to do is pick up the phone. Most online brokers allow some sort of telephone system for just such an occasion. But users must be careful because not all brokers offer a low price to those who get left without service, many simply offer their regular price.

One of the great things about electric trades is that they are executed quickly. Most market orders go through instantly. Sometimes this causes a trader to be alarmed when they haven't received their confirmation email right away, then they send their request again accidentally ordering double. The only way to protect yourself from this is to not completely trust email confirmations from your broker. Give the broker a call to make a double check that your order/cancellation went through.

Finally, if a user doesn't thoroughly research companies he/she could end up with terrible customer service. Traders are often complaining about e-broker errors. After researching and choosing a company, a user must continue to pay attention to monthly statements, electronic confirmations and any copies of trade reports received. And if it resorts to calling customer service, take note as to who you talked to, when and why.

Problems with online trading don't happen everyday, but they do happen. As long as the user is educated as to potential problems and how to fix them he/she will be prepared when the situation arises and will be able to handle the situation quickly.

Where to Research Trading Companies/ Interesting Articles

INFORMATIONWEEK.COM Online Trading Grows Up
Ameritrade CIO looks toward services beyond trading

GOMEZ.COM Top Internet Brokers for Fall 2001

FORBES.COM