Stock market brokerage account
A brokerage account is where you buy and sell real shares. The majority of broker accounts allow you to place trades online or over the phone. When trading online, some brokers make you to place trades by logging into their website and others provide java platforms (or similar) for you to log into and trade from. Fees for trading over the phone are usually higher than online fees so it is worth getting to grips with your online brokerage account.
To set up a broker account you must be over 18. If you are under 18 you can still try practice trading. Unlike a practice account, setting up a brokerage account will not be instant, as personal details need to be checked and approved.
Broker fees for trading UK shares vary from around £7.50 - £12.50 flat fee. US fees vary from around $2 - $14 flat fee.
Choosing a broker account should not just be about how cheap their trading fees are, as there are several other fees you need to be aware of and are listed below. Also, if you will be trading with a lot of money then trading fees will not effect your profits as much, and therefore it might be more important to choose a broker whose website you find easy to use, or a broker that offers high interest rates when not trading.
Note: There are several things you need to look out for when opening a broker account.
- Some brokers will charge inactivity fees so you need to be wary about those unless you are certain you will be trading regularly.
- Some brokers charge withdrawal fees, especially if you request a wire transfer. If you are investing in shares for a regular income and are going to be withdrawing regularly then look out for these fees.
- Some brokers charge data fees. E.g. they might give you US data feeds for free but charge £10 a month to receive UK market data.
- Their interest rates. It will be likely at times you will not have any trades and therefore your money will be in an account receiving interest, make sure you are offered a high interest rate to keep you money growing.
- Their trading platforms. Some brokers platforms or website's, where you trade the shares, can be complicated to use. The last thing you want is to accidentally misplace a trade with real money, therefore you need a brokerage account that meets your computing ability.
For the brokerage accounts with low trading fees, have solid reputation and are easy to use I recommend Hargreaves Lansdown (UK) and TradeKing (US).
View our list of recommended brokerage accounts.
