Nowadays, investors find many opportunities to invest in securities online. The focus is not only on stock trading, other financial products such as ETFs are also popular with many investors. Before making an investment decision, investors should carefully study the investment products and the risks. The personal investment objective should also be defined in advance. Online securities trading requires a securities account with a broker. In order not to fall for dubious offers, a meaningful gathering of information is advisable. A central aspect here is the costs for executing an order and maintaining a custody account.
Table of contents
- Securities trading price comparison - find the best broker
- Online securities trading in shares
- Other securities - bonds, certificates, ETFs, funds and warrants
- Order placement - securities identification number, limits & Co.
- Exchange trading national and international stock exchanges
- over-the-counter direct trading
- lower costs instead of advice
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Securities trading price comparison - find the best broker
A deposit is required to store the securities. Many online brokers do not charge for custody account maintenance. However, there are exceptions here, so this point should be taken into account when trading securities. A broker comparison presents itself necessary to find the best deal. The costs of executing an order are particularly important. The offers of the different brokers sometimes differ significantly from each other, not only in terms of the product range, but also in terms of order fees. The broker calculates a order commission per order for the service provided.
The fee models for some brokers are shown by a fixed price per order, which applies regardless of the order volume. Others, however, set a base price plus a percentage fee on the order volume. In addition, there are often minimum and maximum order commissions. Your own investment goals should be included in the price comparison. Where a fixed price per order is worthwhile for one investor, this can prove to be the opposite for another investor type. The minimum deposit can also play a role for small investors. Therefore, this aspect should not be neglected when looking at the conditions. In addition to the order commission, exchange fees may also apply. However, these are collected by the respective stock exchange.
If you want to trade in investment funds, you should find out about the front-end load. It turns out that many brokers offer promotions that bring a discount on the front-end load. In fund trading, investors can benefit from offers that do not require a front-end load on selected funds. Investors who are considering a fund savings plan for long-term wealth accumulation should also include the front-end load in the expected return. Price comparisons can reveal whether the broker offers a discount or even free fund savings plans.
An attractive return is certainly the goal in securities trading. However the fees for securities trading should always be included in the return expectations. A price comparison can pay off because the order fees can differ from broker to broker. The costs for the front-end load should also be compared when buying a fund.
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Online securities trading with shares
On Many private investors see investment in shares as an investment opportunity to invest money profitably even in a low-interest phase. If you invest in overnight or fixed deposits, you can currently only expect a less attractive interest rate. An overnight or fixed deposit investment is suitable for investors who are not willing to take a risk. When trading stocks, on the other hand, there is no guarantee that an investment will generate a return. The price of a share can be influenced by various factors. Therefore, developments in the market should be kept in mind in order to be able to react quickly. The latest news from companies such as the quarterly figures are also worth knowing.
In order to make a skilful selection of shares, a certain amount of specialist knowledge of stock exchange trading is required. Beginners should not buy stocks without a sensible plan. If you stock your portfolio with several different stocks, you can achieve risk diversification. Putting the entire investment capital in a single security can be very risky. But an equity investment also brings great opportunities. A return can be generated from any price gains and dividends. Shareholders can hope for a dividend payment once a year. The amount of the dividend payment depends on the respective company. As a rule, the amount paid out is determined at the Annual General Meeting.
Beginners should get an overview of the market and interesting titles before the share purchase is implemented. Attractive profits can be achieved through price gains and dividends. However, the price of a share is unpredictable, so a return on share trading cannot be guaranteed. In order to spread the risk, the capital can be divided into several stocks.
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Other securities - bonds, certificates, ETFs, funds and warrants
Also others Financial products present interesting investment opportunities. Bonds from companies or countries can be used to take advantage of attractive returns. Bonds can be traded on the stock exchange as well as over the counter. Anyone who trades in bonds receives interest payments from the debtor. The return is thus generated by the interest payments that the debtor has to make. In the area of bonds, there are various products, including
- government bonds
- equity bonds
- index bonds
- option bonds
Investing in exchange-traded index funds (ETFs) has been proving popular with investors for some time. Online securities trading with ETFs has several advantages that speak for the financial product. This primarily includes the price structure, which is cheaper than that of traditional funds. Most ETFs are passively managed index funds, which explains the comparatively low cost. ETFs are also very transparent. Investing in an ETF savings plan is also an option for long-term wealth accumulation. Some providers already show minimum savings of 25 euros per month. Not all ETFs offered by a broker are also eligible for savings plans, which should be taken into account. However, there is often a fund search that can be used to filter out ETFs that are eligible for savings plans.
In exchange trading, warrants are one of the more risky trading options. Warrants can show steep price jumps, so when placing an order the setting of limits should be considered. In any case, limits and various order additions can prove useful in online securities trading, for example to hedge a position. When trading certificates, beginners should bear in mind that they are financial derivatives. Pricing can be difficult to estimate over the term. Online commodities trading is also interesting.
Investors should always be aware of how an investment product works in order to be able to properly weigh up risks and opportunities. Not every investment product is well suited for beginners. Depending on the investment objective and experience, a suitable financial product should be selected. Investors should also inform themselves appropriately about limits and order supplements in order to be able to use them if necessary.
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Order placement - securities identification number, Limits & Co.
If the decision for a broker has been made, the opening of the depot is the next step. The online application for the opening of a depot can be found quickly via the broker's website. After the application has been completed online, it can be printed out. The signature should not be forgotten. The verification of identity is required in the course of opening the depot. The Post-Ident procedure can be used for this. Some providers can also use the video identification process for legitimation. At various banks and direct banks, investors can use a free overnight deposit account as a clearing account. A German bank account is usually a requirement for applicants. This is used as a reference account for payments.
The range of functions of a modern trading platform often offers more than just the option of executing orders. There can be quotes in real time for different exchanges. In addition, charts and detailed analyzes prove to be relevant for the trade. With the aid of the various tools, investors can optimize securities trading. Not all functions can always be used free of charge, which should be clarified in advance. Mobile trading is also a solution that is particularly useful for investors who are often on the move.
Whether a purchase or a sale is to be carried out must be specified when entering the order. When creating an order, the desired security can be specified by specifying the security identification number (WKN) or the international security identification number (ISIN). Quantity and stock exchange can also be selected. Limits can be set for an order for securities. Order additions can also be used.
Some information has to be given for placing an order, including buying or selling, WKN or ISIN, quantity and stock exchange. In addition, a limit or an additional order can be set while the order is being created. The validity is to be observed with limits and order supplements. The functional scope of a trading platform can include real-time prices, analysis and chart tools.
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Exchange trading on national and international stock exchanges
Many online brokers can place security orders around the clock. If the broker also offers securities trading on international stock exchanges such as Asia, America and Asia, investors can benefit from the time difference. Trading on domestic stock exchanges is possible from Monday to Friday. The stock exchanges are closed at the weekend. There are sometimes differences in the trading hours of the German stock exchange. XETRA trading is possible during the week from 9:00 a.m. to 5:30 p.m.. In addition to XETRA, the Stuttgart Stock Exchange is also one of the best-known trading venues in Germany. The Stuttgart Stock Exchange starts trading at 8:00 a.m. and ends at 10:00 p.m. The following domestic exchanges have trading hours between 8:00 a.m. and 8:00 p.m.
Some brokers show their customers the national and international trading hours on his website. It should be ensured that the different trading hours are displayed in Central European Time (CET). The best-known international stock exchanges include NASDAQ and NYSE. For investors from Germany, the time difference must be taken into account.
The trading hours of German stock exchanges can differ. XETRA is an electronic trading system. XETRA trading is only possible until 5:30 p.m. from Monday to Friday. Whereas the trading hours of the Stuttgart Stock Exchange last until 10:00 p.m. If the trading hours of international stock exchanges are given in the respective local time, the time difference has to be taken into account.
Over-the-counter direct trading
Nowadays private investors also have access to the over-the-counter Direct trading through an online broker. Direct trading has three different variants. OTC trading in listed securities is one of them. Various online brokers have direct partners for direct trading, through whom, for example, shares, ETFs and warrants can be traded. But derivatives such as CFDs can also be traded over the counter through some brokers.
As with other financial products, there are advantages and disadvantages to direct trading. One advantage of direct trading can be seen in the cost savings. The exclusion of the exchange means that there are no exchange fees. The longer trading hours are also positive for investors. On the other hand, the low market transparency brings with it a not insignificant disadvantage.
The over-the-counter can be obtained through various online brokers Direct trade can be implemented. There are often several trading partners to choose from. Not only stocks, ETFs and warrants can be traded through direct trading. CFDs can also be traded here. Investors can save costs through the elimination of exchange fees.
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Lower costs instead of advice
Those who have already carried out a securities trading price comparison, has certainly noticed that the cost of the deposit at direct banks and branch banks can differ. Where active investors at many direct banks are rewarded with a free custody account, investors at branch banks often have to pay for custody account management. Some direct banks specialize in securities trading and do not offer bank products such as checking accounts or overnight deposits. If you want to trade securities through a direct bank, you do not need advice, as is known from branch banks.
In terms of order fees, some direct banks also have more favorable conditions than some branch banks. On-site advice cannot be used by direct banks. Customer service can be contacted if there are any questions about the offer or technical problems. For this purpose, the providers often show several contact ways, so that contact can be made by phone, email or contact form. Some providers also offer live chat and WhatsApp under the contact options.
If personal advice is desired, a branch bank can be the right choice. Since every investor needs a custody account in order to be able to trade securities, a comparison between different branch and direct banks is recommended. Direct banks do not show a branch network, so on-site advice is usually not a service. Customer service can also be contacted if you have any questions about opening a securities account or other aspects.
If investors do not spend a lot of time looking for the right broker price comparison can prove useful. The prices play an important role. There is no guarantee of a return in securities trading, but the fees per order are incurred in any case, so you should look for cheap offers. Investors can easily participate in securities trading via the Internet. Once the right broker has been found, all that is left to do is open a custody account and fill the trading account with credit.
Various financial products fall into the securities area, including shares, funds and bonds. It is up to the investor himself to determine which financial product is used for trading securities. The functionality of the financial product should be known so that the risks can be assessed accordingly.