Week 5 Project

Running head: ONLINE TRADING 1

Trading Platform

South University Online

Sandra Villarreal

FIN2030 Foundation of Financial Management SU01

Dr. J Flores

April 11, 2021

ONLINE BROKERAGE ACCOUNT

An account that keeps financial assets on the behalf of its investor either with a bank or a broker. Generally, securities are sold and purchased through brokerage or securities accounts. Security accounts exist in various forms such as:

· Share account

· Option account

· Margin account

Requirements of opening a brokerage account online

some brokerage houses require a minimum amount of $1,000, $2000 or more while other gives an option of opening an account with minimal amount with a restriction to agree on term of regular deposits in brokerage accounts whether on monthly, quarterly, or yearly basis. The customer needs to visit the website of the broker of securities with which he intends to have an account. Consider the type of account investor needs to open along with its features and associated costs. After choosing the desired brokerage compatible with investor’s requirements. The investor might then start the processing his application by agreeing to the terms and conditions and should initiate funding to make its account operational.

Following additional information is required to open a brokerage account:

1. Driving license

2. Passport information OR CNIC (computerized national identity card)

3. Employment details

4. Occupation

5. Details of annual income

6. Contact information

7. IBAN number

8. Email address

Dividend reinvestment plan

It is an investment plan chosen by the investment where he chooses to reinvest dividend in the underlying security by forgoing option of receiving cash dividend. Investor can also choose an option between Dips and Drips where you do not need to open a brokerage account to make purchase rather you can directly buy shares from concerned companies. Many companies offer Drips such as:

· Johnson and Johnson (JNJ)

· Chubb limited (CB)

· Exxon Mobile (XOM)

· 3M Company etc.

Online trading companies

Following three are one of the best online trading companies:

Webull

Robinhood

Trade station

Webull Financial LLC

Webull offers an electronic platform of trading stock and securities making accessibility easier through mobile applications or laptop. It is privately owned company based in New York, USA.

Following are the requirements to open a trading account with Webull:

1. Go to the website www.webull.com , choose an option to open an account

2. A valid government issued card

3. Fill in the details of application form available on website

4. Submit and wait for the application to process.

The account takes less than 10 minutes to complete its processing.

Minimum balance to open an account at Webull and other features

No amount is required to open an account with Webull. It offers free of commission services and no transaction fees for mutual funds. Webull offers lowest fees among all other brokerage houses without reducing quality of its services. It is deemed to best for beginners for opening trading accounts. It has complete access to cryptocurrency but offers no mutual funds. It is considered best for:

· Active traders

· Option traders

· Cryptocurrency traders

· Intermediate investors

Webull charges zero fee or commission on any stock. Only transaction cost needs to be paid which are only minimal. Also, it has zero transferability fee whereas domestic wire transfers cost is $8 per deposit and $25 per withdrawal.

Webull does not offer Drip right now.

Robinhood

Robinhood markets is an American based trading company. It offers free of commission stock trading and exchange traded funds. It offers it services through a flexible mobile app.

Requirements of account opening at Robinhood

Following are the requirements for account opening at Robinhood:

1. Go to website www.robinhood.com.

2. Submit your contact details

3. Government issued card details

4. Submit a request for verification of details. This procedure may take five to seven working days.

Minimum cost to open an account at Robinhood and other features

It charges zero dollars on brokerage account where $2000 is required as minimum cost for margin account. It charges no annual fee or ACH transfer fee. For ACAT it charges $75 while Robinhood gold account costs $5 a month. It has following features:

· No minimum account

· Streamlined interface

· Cryptocurrency

But it does not offer retirement accounts, mutual funds and unlimited customer support service.

Robinhood offers dividend reinvestment plans to its investors DRIP. Dividend can be automatically reinvested into individual stocks or ETFs.

Tradestation

Tradestation group Inc. is a parent company dealing with online securities. It is initially based in Florida.

Requirements for Account opening at tradestation

The minimum amount required to open an account at tradestation is $1. Zero balance is required for cash accounts while it requires a deposit of $2000 for margin accounts and $5000 for futures accounts.

Additional requirements are as follows

· Go to website www.tradestation.com

· Fill in application form

· Details of government issued identity cards

· Contact information

· Mailing address

· Submit the details

Its pros are:

· Efficient mobile trading platform

· Low stock and ETF fees

· High quality tools

Its con is:

· Average customer service

· No forex trading

· Not user-friendly withdrawals

Whereas Tradestation does not offer DRIPs.

Conclusion:

Of these trading companies, Robinhood is considered best of all as it offers most of the services for free with 24/7 customer services with a huge advantage of offering DRIPs.

References

Carey, T. W. (2021, January 29). Robinhood Review. Investopedia. https://www.investopedia.com/robinhood-review-4587919

Dayana Yochim. (2019, January 29). 9 Best Online Brokers for Stock Trading of December 2019 - NerdWallet. NerdWallet. https://www.nerdwallet.com/best/investing/online-brokers-for-stock-trading

Reinkensmeyer, B. (2021, January 20). 5 Best Brokers for Free Stock Trading 2021. StockBrokers.com. https://www.stockbrokers.com/guides/free-stock-trading