How shares are traded

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7. Placing buy/sell orders online

Let's say you're still interested in buying 1,000 shares in Midco but this time you want to do it online:

1. You log on to the broker's internet site and go to the trading section. After keying in Midco, the screen will display the current bid and offer prices and, in some cases, the 'normal market size' (NMS).
2. The screen will also display an 'order form' into which you key the number of shares you are buying or selling.
3. If you are buying or selling within the NMS, you can be fairly confident when you place your order that you will get the price displayed. There is no guarantee of this if you place a market order ('at best') but some online brokers will allow you to place a limit order ensuring that you don't pay more than you want.
4. Some online brokers operate a system in which you have 15 seconds after a price is displayed to decide whether or not to proceed with an order. If you do, you will get the price displayed, but after 15 seconds the screen is refreshed and you have to start again.
5. Once you have placed your order, you will usually get online confirmation that it has gone through, the price at which it was executed, and the commission and stamp duty charged.
6. Note that some online brokers operate a fully automated system in which all the trades are done by computer, while others take your online order and process it in the old-fashioned way, possibly even getting on the phone to a market maker. One method is not necessarily better than the other, but it's worth checking how automated your online broker really is.
7. If the broker offers online portfolio management and account viewing, you will be able to see the results of your recent transaction on your account. It may reflect the addition/removal of the company from your portfolio and the change to your cash balances.

1. The role of brokers 2. What type of broker do you want? 3. Choosing a discretionary or advisory broker 4. Choosing an execution-only broker 5. Opening an account with a broker 6. Placing buy/sell orders by telephone 7. Placing buy/sell orders online 8. Normal market size 9. The spread 10. Contract notes 11. Settlement 12. Conclusion

• First Steps in Shares