Investor Account Security and Trade Order Execution Issues in Online Stock Trading

There are several factors, besides the low trade commissions, that you should consider before finally settling for your online stock broker.

Some of the most important considerations should include fast trade execution, security of your personal information, fund transfers, insurance and protection of your account.

Your stock broker’s website should provide facilities for education and research for the clients such as graphs, ticker symbols, news headlines, latest stock quotes and so on. Also check the account protection limits.

Security of funds

Brokerage firms that are conscious of the security of their customers’ online accounts, usually purchase membership of account- protection companies such as Securities Investor Protection Corporation or SIPC.

These companies offer to protect the accounts of the customers up to $5,000,000, including up to $1,000,000 in cash. There is also a provision for additional protection for larger amounts from firms like London Underwriters which offer protection of investments to the tune of $4,500,000 (including $900,000 in claims for cash) for each customer account.

Thus the total account protection, that each account holder may avail, may go up to $5,000,000, including up to $1,000,000 in cash.

Enhanced online security of personal information

Nothing is more important in stock trading than the security of your personal information including your financial assets and account access.

When you open a new account, you are allowed to set up a user name or ID, a password, account PIN, personal account image and personal account phrase.

What would happen if some one could hack your personal information such as customer ID and password and withdraw your funds? Such practices called account phishing and pharming have become normal occurrences with credit card and banking transactions across the world.

So you must choose your online stock broker who can maintain the most strict physical, electronic and procedural safeguards to secure your vital personal data and prevent an unauthorized account access.

You must, therefore, ensure that your broker has incorporated the latest technology and a strong and sensitive security system to combat online frauds and identity thefts.

The website of the brokerage firm should educate you not only about various issues relating to stock trading, but also about the various tactics and tricks that the identity thieves use to acquire your personal information.

You should be educated about the various steps that you need to take to protect yourself against your identity theft while you are surfing the Internet to research data of financial companies and stocks.

Check if your online stock brokerage uses the industry-leading 128-bit VeriSign SSL encryption technology throughout its website to ensure that your personal data is always protected from eavesdropping, tampering, and forgery.

It must be noted that “SSL stands for Secure Socket Layer and is a communication protocol used to secure data transfers over the internet by mathematically transforming a message so its contents are concealed to everyone but the intended recipient.”

The website of your stock broker should display a clickable VeriSign Certificate Icon located at the bottom of each page.

As a vigilant investor you should verify the security claims of your stock broker by clicking the VeriSign Certificate Icon and view the SSL certificate showing the name of the brokerage firm. In short your broker should provide you a fool proof and secure trading environment.

Fast Oder Execution

Fast order execution is of paramount and critical importance especially in online stock trading. It is, in fact, a key element for successful stock trading and investing. Imagine yourself hitting the sell or buy button on the stock trade page of your broker’s website!

Those who understand the nature of online stock trading can very well realize the importance of instant execution of the trade order. A slight delay in order execution may cost heavily to the stock trader.

In fact the world may change in each passing moment. The price may either rise or fall shattering all your calculations. Each moment between the placement and the execution of the order appears to hang heavily like an eon on the nerves of the trader.

Ensure before you open an account with an online stock broker that he possesses all the cutting edge technological resources, trading infrastructure and platform design for fast trade executions.

Some brokerage firms use the NASDAQ Platinum-certified Direct Market Access Trading Platform, LASER, for fast data execution and clearing solutions. Modern trading technologies and advanced trading platforms can transact millions of shares each day. The reputed brokerage firms are equipped with state-of-the-art servers that can handle the highest volumes of quote and order data.

Address These 3 Trade Entry Rules and Prosper in the Great Depression of 2009 – 2012

More Trade Entry Rules

If you have decided to give it a go yourself, here are a few good rules of thumb to follow. Your trade entry rules should address each of the following:

· trend

· liquidity

· volatility

Let’s look at these in more detail.

Trend

The cornerstone of technical analysis is the trend. Remember ‘the trend is your friend’ and you always want to trade with it, not against it. I believe this to be the most critical component of any trade entry system. You need a way to measure the trend.

There are many ways to identify trends, and as with most things in trading, there’s more than one way to skin a cat. The key is to have a method in place.

One of my preferred methods for identifying trending securities is to find securities trading at their recent highs. That is to say, the highest high price must have been achieved in the past x number of days (where x is the variable depending on the timeframe you are trading). The longer the timeframe, typically the higher the variable.

Example:

If I were to trade a medium to longer term approach I might want the highest high price in the past 200 days to have occurred in the past 20 days.

I use a charting package called MetaStock (covered in more detail in chapter 8). Using MetaStock the formula would look like:

HHVBars(H,240) Liquidity

Liquidity is an important determinant because you want to be trading securities that you can buy and sell quickly and without moving the market. You never want to be caught in a position where you want out but there’s no one to buy.

With liquid stocks, such as the forex market that trades billions of dollars each day, trades are happening constantly, so your activity alone will not move the market. In short, avoid illiquid securities.

Example:

Depending on the size of your float, you might want the average daily trade volume to be greater than $400,000. This could be achieved by requiring that:

The 21-day average of volume multiplied by the closing price be greater than $400,000.

Using MetaStock the formula would look like:

Mov(v,21,s)*C > 400000

Volatility

Volatility is simply a measurement of how much a security moves. Volatility is not a measure about whether it goes up or down, just how much it fluctuates.

It is important to trade securities that move enough for you to make a profit. Of course you don’t want securities that are so volatile you can’t get to sleep at night. On the other hand, you don’t want something that moves at such a snail’s pace that it is not delivering the returns you are after.

One of my favourite ways to identify volatility is using the ATR method which indicates how much a security will move, on average, over a certain period.

Here’s how I might use this method. A $10 security might have moved fifty cents on average over the past 21 days. I can simply divide this value by the price of the security to calculate the average percentage movement of a security over the past 21 days. With this value, I can stipulate a minimum and maximum volatility value.

Example:

If I were a reasonably conservative trader I might want a security to trade between a band of 1.5-6%. That is to say, I want the ATR divided by the average closing price, over the past 21 days, to be greater than 1.5% and less than 6%.

Using MetaStock, the formula would look like:

ATR(21)/Mov(C,21,S)*100 > 1.5 and
ATR(21)/Mov(C,21,S)*100

Secure Your Trading With Stock Futures

If you are an intraday trader then you know that stock market is very volatile. In this volatile market you must know how to do secure trading to increase your returns and investment. If you are going to invest your money in market so first you must know about the Market. You should know where to invest and how much to invest? If you know the answers of these questions then you are ready to trade.

Your first work is to start your trading with less risk then you could invest your money in stock market. This is a platform where you just need to pay less amount which is the lot size of the company and you are able to buy Stock Future more than 5 times of your investment. In Stock Futures you can square off your position if you are going in to loss, or want to make profit. You can square off your position on contract basis (Contract is finished in 3 months).

You want maximum profit so stock Future is market where you can hold your stocks and square-off your position when you are in profit. And if you are going in loss, and want to minimize the loss then by hedging you can minimize your loss and you can also maximize your profit by hedging. Last Thursday of month is the Expiry date of the contract. And that Thursday you have to square-off your position and clear your account.

Why invest in Stock Future?

If you are going to invest in Stock Futures that means you are going to right path because in it you can do the Trading with very less amount, and the percentage of the risk is also less than the other markets. In Stock Futures you get the time for settlement of stocks means you get the time to convert your loss into profit.

If you are a beginner and want to do trading in Stock Futures then first you need to know about the basics of the Future market and start your Trading with Stock Future and consult with a Good advisory firm and update yourself with the current market movement. These basics and the advisory firm from which you take help for your trading tells you exactly when to buy and when to sell the stocks. They also recommend you the stock which you should buy or sell with entry level and proper achievable targets.

In both the situation when market is bearish or bullish you should be able to make your profit by gaining the knowledge and be a good investor and trader.

If you have any Query you can avail Stock Future Tips from CapitalVia which is the best Investment advisory firm.