If you want to trade in stocks and shares, the ideal way is to open an online trading account with a stock broker. The advent of the broadband Internet has made the registration of online trading account very easy and simple. In fact, it takes only a few minutes to set up an account.
The first step is to provide your personal information which includes your name, your mother’s maiden name, date of birth, marital status, the number of dependents, whether married, postal address of your home and office, email address and your residence, office and mobile phone numbers. An important thing to note here is that you must be 18 years old or above in order to execute any financial transaction.
You are also required to provide your financial information, which generally includes your employment status, employer’s name, if employed, your office address and your annual income. If you are self-employed, you need to provide the detail of your annual income, your net worth and also your liquid net worth. Providing financial detail is imperative since you are entering into a trade wherein you may have to receive credit from your broker.
Since your online trade may involve huge amounts of investment, it is important that your transactions remain confidential and secure against any manipulation, hacking or pilferage. In order to protect your financial information and ensure that the transactions and trading remain confidential, you have to select a user id and password to access your online account. It goes without saying that your password should be known only to you and you should not even share it with your broker. Never divulge your password to anyone or write it anywhere under any circumstances. The best way to create it a safe password is to use both numeric and alphanumeric characters. Also, you must keep changing your password every few months to be on the safe side.
Online stock brokers use many other techniques to secure the privacy of their investors. For example, they may allot you some image/phrase or an encrypted number/code, which will be known only to you. Therefore, your account page will never open unless you provide the required information. You may also be required to select certain secret questions and provide answers to them in case you forget your password or may wish to change it.
In order to view real time data provided by your stock broker, you may also be required to read, understand and comply with certain mandatory terms and conditions laid down in the NYSE and AMEX data subscriber agreements. For this, check the box at the end of each agreement.
It is always advisable to be fully aware of certain elementary information before opening an online trading account. For example, to choose the account that suits your requirements, you should know the types of accounts available and their advantages and disadvantages. Ordinarily, there are four account types: Individual Accounts, Joint Accounts, IRA’s (Individual Retirement Accounts), and Education Savings Accounts. Brokers usually provide the details of each of these accounts in their web pages.
There may be times when you may have to ask for credit from your broker. So you must acquaint yourself with the concept of cash and margin accounts.
For opening an online trading account, you have to be either a US citizen or a resident non-citizen with a valid Social Security Number. The Internal Revenue Service (IRS) also issues Individual Taxpayer Identification number (ITIN) to individuals who are required “to have US tax identification number, but who do not have and are not eligible to obtain a social security number-SSN from the Social Security Administration-SSA”.
“ITINs are issued regardless of immigration status because both resident and non-resident aliens may have the US tax return and payment responsibilities under the Internal Revenue Code. Individuals must have a filling requirement and file a valid federal income tax return to receive an ITIN unless they meet an exception.”