PRESS CENTRE

DESKTOP TRADER
BROADBAND & INTERNET ADVISOR - May 2005

By Dave Howell

Playing the stock exchange can offer you an exciting pastime as well as potentially being very lucrative. Dave Howell discovers that trading on the stock market can be just a mouse click away.

Once upon a time, trading in stocks and shares was practised by a select and privileged few deep in the bowels of the world's sacred financial institutions. These days, trading in stocks and shares has become just as easy as ordering a book from Amazon.

The key to successfully trading on the world's stock exchanges is to do your homework. The more you know about the company you are thinking of investing in - especially what its future prosperity may be - the better informed your buying and selling decisions will be.

The actual buying and selling of a share is the easy part, it's knowing when to buy and sell that is important. Again, all the information you need to make informed buying and selling decisions is available on the internet, if you know where to look. It seems the bear pit has moved from the stock exchange and onto your desktop.

OPENING AN ACCOUNT

So, how do you begin to trade in stocks and shares? The procedure is simple, but it's influenced by how active an investor you intend to be. If you just want to buy the odd share then you can do this quickly and easily with an account with a reputable broker. If you have ambitions to become a day trader, or ant to actively invest in the stock market on a monthly basis perhaps, the tools that you need are easily accessible right from your PC.

It's a good idea to open what is called a 'nominee' account. This is the most basic account you can get. When you buy a share you don't actually get sent the share certificates. These are held in what is called a 'pooled nominee' account'. What this means is that in effect your broker holds the shares for you.

Nominee accounts come in two varieties: a 'normal' account means that the share certificates will have your broker's name on them so the company you are investing in doesn't know you are the shareholder. The other type is called a 'ring-fenced' account, where your name is on the shares as the broker holds them in your own special account. You'll need a ring-fenced account if you want to vote at the shareholder meetings you are entitled to attend.

FINDING A BROKER

If you do a search for a broker you'll see hundreds of websites that purport to offer these services. Your first port of call, however, should be your bank or building society. If you already use online banking try logging on to your service and see if you can open a share trading account with your bank. This is the easiest method, as once you have completed the application you can fund your share dealing account with money from your existing bank account.

If you don't use internet banking, you can still sign-up for an account with a wide range of established financial service providers. Outside the high street banks there's a wide range of alternative services that you can use to trade in stocks and shares. One of the leading service providers is ShareCrazy (www.sharecrazy.com). There are also a number of useful financial services portals that you can visit. They all list a number of brokers you can contact before you make your final choice.

"The bear pit has moved from the stock exchange and onto your desktop"

The kind of account you will most likely open with any of these brokering services is what is called an 'execution-only' account. This simply means that the nominee account you have already opened will allow you to make the transactions that you specify to your broker. They will carry out your buying or selling instruction to the letter, but they will not give any advice or help you in any way with which shares to sell or buy; that decision is entirely yours.

It's a good idea to check with your broker what type of account you have opened if you aren't sure, but the vast majority of beginners will just need an execution-only nominee account. The great thing about these types of account is that they are cheap. The costs involved can be below £10 per transaction if you shop around, with reasonable monthly subscription charges for the more active investor.

Once your account is functioning properly you can then begin to buy and sell shares. This isn't a complex procedure as all you need to do is fill in the online form on your broker's website to complete your transaction. The first thing you'll need to know is the EPIC code for the company you are interested in. This is a unique letter code that every company on the stock exchange has. Vodafone's EPIC code is (VOD), for example. If you don't know this, any trading site worth its salt should have a quick look-up facility you can use.

The next step is to input either the number of shares you want to buy, or the value of shares you would like. You'll then receive a quote. This is where things get a little more intense and exciting as you now have around 15 seconds to either accept the quote or decline it. This is where the hours you have spent looking at a company's history, trading figures, company reports and projected earnings come into their own. You should know if the quote you are being offered is a good one or not. If you accept the price don't forget to print off the screen that gives this information - you may need it later to settle any disputes that arise. It's also a good idea to print the email confirmation you should receive after each transaction successfully completes.

INFORMATION IS POWER

Many service providers have realised that their online customers want a one-stop-shop where they can see the very latest share information as well as keeping track of their current portfolio, plus the ability to buy and sell shares. Some companies also provide specialised investment software that you can buy that allows you to track all your shares off-line and only use the internet to download new share data and, of course, to complete the buying and selling transactions.

You can also learn a lot from other traders. Why not join the UK Shareholders' Association (www.uksa.org.uk) and get some inside knowledge? Or check out any investment clubs in your area. Or why not start up one of your own? You can get all the information you need to get started from ProShare Investment Clubs (www.proshareclubs.co.uk).

TRY IT AND SEE

Trading in stocks and shares has never been easier. The internet is you own window onto every stock exchange in the world and also allows you to buy, sell and manage your shares with just a few clicks of your mouse.

The level of activity you have with your investments will govern how much data you actually need, and how time-sensitive you need it to be. The cost of this data obviously rises as you require more detailed up-to-date information, but if you just want to buy the odd share or need to liquidate some of your existing holdings, setting up a broker account is easy and straightforward.

With services like ShareCrazy putting a more human face on trading in stocks and shares, now is the time to have a go if you fancy yourself as the next Warren Buffet.

FIRST TIME BUYERS
Buying shares online is easy at www.sharecrazy.com

01 - The Legal Stuff

You have to wade through the small print before you can sign up for the ShareCrazy service. It's a good idea to dive in and read this document so you are completely aware of your liabilities. Click 'I Agree' when you're finished...

02 - Enter Your Details

Choose a temporary password for your new account. Your bank details will be used to transfer money to your share account.

03 - Activate Your Account

You'll need your account number, so check your inbox, as an email should have been sent to you after you completed the last screen. Enter this and the other personal details requested. This is the last step before your account becomes active.

04 - Log In To Your Account

You are now the proud owner of a brand-new share dealing account. From now on each time you want to buy or sell you'll need to log in to your user account. This is simple - all you need is your Username, Password and Account Number.

05 - Validate Your Account

You'll now see the confirmation screen with your unique details - don't leave your PC unattended with this visible. Click the 'General Dealing Account' button to start trading, or open an ISA or PEP dealing account. Click 'Cancel' to end your trading session.

06 - View Your Portfolio

If you've transferred stock into your account, it will show on the portfolio. Click on 'Dealing', type in the share you want to buy or sell, fill in the number of shares to buy or sell or amount of money to invest. Confirm your transaction within 15 seconds.

CAN SHARE TRADING REALLY BE FUN?
Alan Green, Managing Director, ShareCrazy

Alan spent 17 years involved in advertising and marketing in the directory business, and had the idea for ShareCrazy (www.sharecrazy.com) after finding financial and share information sites were rather dull.

Do you think that the vast majority of the public still see buying and selling shares as something of a black art?

ShareCrazy has always been about demystification of the process of buying and selling shares, and we have been very much at the forefront of changing public perception. Our resident cartoon investor Joe Public is largely responsible for this, adding a fun and informal element to ShareCrazy. Joe appears in a suit and bowler hat on the Trading part of the website, and in one of three guises on the main information website. The private investor is better informed now than a few years back, due in no small way to the proliferation of broadband throughout the UK, which in turn has made online dealing and researching shares as easy as buying and selling on eBay.

What are the main problems that first time traders encounter?

Problems usually stem from a lack of knowledge and the need to ask questions ongoing throughout the process. ShareCrazy offers real-time access to experienced traders via our bulletin boards through Superscriptions. While this process is necessarily separate from the sign up process for ShareCrazy Trader online dealing, members can sign up for a Freebie information account, accessing a free bulletin board, a virtual portfolio Stockwatch and 15 minute-delayed market data. Alternatively they can sign up for Supermarket, which offers a subscription bulletin board where members can talk to share author, trader and broadcaster Malcolm Stacey, plus receive several stock tips each week. At just £3.99 per month, Supermarket also features the Rumour Mill, a tool to help share buyers catch shares, which might rise on account of news releases. Finally, for £39.99 per month serious traders can sign up for Hypermarket, which features the Supermarket offerings plus live streaming Level 2 data from the stock exchange.

Many people still don't trust the net with their money. How have you made you system secure?

ShareCrazy Trader offers the very best protection for online dealing. Internet security is and has always been a major concern, so our dealing site is encrypted to the highest civilian spec available and includes firewalls, 128-but encryption, 24/7 monitoring and password protection.

www.netadvisor.co.uk

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