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What should I know if I want to trade on the Internet?

There are definitely some positives in online trading for the small investor. The two big advantages are cheap trading and convenience.

But you must remember that successful investing is all about the amount of time you spend in the market -- not market timing. The ability to make quick trading decisions based on short-term information is a big pitfall of online trading. You could find yourself making highly speculative investments if you're not careful. It's important to do the same amount of research you normally would if you weren't trading online. Don't let the convenience of online trading lull you into forgetting to do your homework. Know what you are investing in before you click the submit button. To open an account on the Internet, most brokers require you keep at least $1,000 in your account. Some firms set a minimum of at least $20,000. Then the broker will send you a Personal Identification Number (PIN) and a user name. This lets you log onto their web site. At their site, you can look at your portfolio, check to see how much money is in your account and review your account's trading history. Brokerages which offer Internet trading do not offer an advisory service, merely execution of the trade. You may have access to various research tools such as company news releases and charts. Some brokers offer you third-party information like the Financial Post Data Group, Standard and Poor's or Baseline. Or the broker might have its own proprietary research available to you at its web site. Several also offer mutual fund research tools. Entering orders to buy stocks or mutual funds is straightforward. You complete a form online and submit it to the brokerage firm at any time of the day or night. But the execution of your order will be done during regular trading hours. Once your order is received it will be sent on to the relevant stock exchange or mutual fund company. You will get an electronic confirmation while on the broker's web site if it is a stock or mutual fund you are buying. A written confirmation will also be mailed to you. In the past, in order to comply with regulatory requirements, all registered brokers were required to review each client order for suitability, even if the client was not seeking the broker's advice. Known as the 'Suitability Rule' or 'Know Your Client' (KYC) this was discontinued in 2000 for online services which did not provide advice.

Pointers for trading online: