Anybody who has the intention of investing in stocks, shares and bonds in the share market has two options. Either he can go online, and place his order upon the form on an online trading website. Or he can call up his stock broker and place the order upon the phone.
If you do not have the experience to play around with large amounts of cash on the stock market, don't take this risk. It needs a lot of experimentation, getting your fingers burned and experience, before you can start upon online trade. The stock market is very volatile and that is why you should know some rules before you start trading online.
Many people buy securities on cash accounts online. You have to pay for the securities you have bought, before you can sell them. Many people do a lot of free riding, which means they do not have the money to pay for some securities and have bought them. The moment, the price goes up, they sell them. The Federal Reserve Board has provisions for credit extension, and this is a violation of those provisions. Your stockbroker will need to freeze your account for three months. This means you will be allowed to do online trade. But your securities are going to be given to you on immediate payment. If you do not want this freeze to happen to your account, pay for your stock from three to five days of the purchase date of the stocks. The money cannot come from the money obtained from the sale of the stocks. Brokers normally do not give any extensions. Any online trade done on margin means your broker can sell the securities. He is not bound to give you any margin calls for his online trade. That is why it is necessary that you read the margin agreement. If you have not fulfilled the margin requirement of your account, your broker can then sell your securities. He has the legal right to recuperate his losses in this manner. Remember that margin calls are not requirements, but courtesy calls from your broker. He can either make them not to you or not.
If you do not have the experience to play around with large amounts of cash on the stock market, don't take this risk. It needs a lot of experimentation, getting your fingers burned and experience, before you can start upon online trade. The stock market is very volatile and that is why you should know some rules before you start trading online.
Many people buy securities on cash accounts online. You have to pay for the securities you have bought, before you can sell them. Many people do a lot of free riding, which means they do not have the money to pay for some securities and have bought them. The moment, the price goes up, they sell them. The Federal Reserve Board has provisions for credit extension, and this is a violation of those provisions. Your stockbroker will need to freeze your account for three months. This means you will be allowed to do online trade. But your securities are going to be given to you on immediate payment. If you do not want this freeze to happen to your account, pay for your stock from three to five days of the purchase date of the stocks. The money cannot come from the money obtained from the sale of the stocks. Brokers normally do not give any extensions. Any online trade done on margin means your broker can sell the securities. He is not bound to give you any margin calls for his online trade. That is why it is necessary that you read the margin agreement. If you have not fulfilled the margin requirement of your account, your broker can then sell your securities. He has the legal right to recuperate his losses in this manner. Remember that margin calls are not requirements, but courtesy calls from your broker. He can either make them not to you or not.
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