The
Online Investor
Developments in technology
now allow investors to manage their own investments online, at
virtually any hour of the day or night. while online trading
can be a "hands-on" learning experience for
investors, it may not be appropriate for everyone. Whether you
manage your investments on your own via the Internet or by
working in person with a broker or investment adviser, it is
essential that you know what types of securities you are
purchasing, how they meet your investment goals, and the risks
associated with each investment.
Online
Trading and the
Short-Term Investor
Some investors use the
Internet to trade frequently with the hope of profiting from a
rapidly changing market. Although the possibility of quick
profits may be alluring to some investors, this strategy can
be risky. Market volatility, inaccurate information
about anticipated changes in stock prices, and delays in the
execution of online trades may lead to financial losses.
Online
Trading and the
Long-Term Investor
Investors can also trade
securities online as part of a long-term investment plan. Some
investors research securities and then place trades without
any professional guidance. Other investors use the Internet to
manage a few of their investments on their own and then
consult a broker or investment adviser for help in managing
the rest of their portfolio.
The Internet: A New Tool
for
Financial Management
Then Internet has become a
round-the-clock source of financial products, services, and
information. Electronic trading, or online investing, is also
growing in popularity. As more investors explore the Internet
for the purpose of personal financial management and investing,
it is important to remember that it is just a tool. A working
knowledge of basic personal finance, good decision-making
skills, and an understanding of the potential risks are
essential to investing, especially when investors enter
cyberspace. |
Tips
for Online Investors
The following tips were
developed by the North American Securities Administrators
Association, Inc. to educate investors and help them to think
carefully about online investing.
Before
beginning an online investment program, be sure to:
1. Receive full
disclosure about the alternatives for buying and
selling securities and obtaining account information if you
cannot access the firm's website.
2. Understand
that most likely, you are not linked directly to the market
through your home computer, and that the click of your mouse
does not instantly execute trades or cancel orders.
3. Receive information
from the firm to substantiate
any advertised claims concerning the ease and speed of
online trading.
4. Receive information
from the firm about significant website
outages, delays, and other interruptions that may
affect your ability to execute trades.
5. Obtain information
about entering and canceling orders (market, limit, and stop
loss), and the details and risks of margin accounts (borrowing
to buy stocks).
6. Determine if the
stock quotes and account updates you receive are real-time or
delayed.
7. Review the firm's
privacy and security policies. Determine if your name will be
used for mailing lists or other promotional activities by the
firm or any other party.
8. Receive clear
information about sales commissions, transaction fees, and
conditions that apply to any advertised discount on
commissions.
9. Know how to contact a
customer service representative if problems occur. Request
prompt attention and fair consideration. Be sure to keep good
records to substantiate any problems that may occur.
10. Contact the
Oklahoma Department of Securities to verify the registration
status and disciplinary history (if any) of the brokerage
firm, or to file a complaint, if appropriate. |
