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.