Find the best online broker

The recent rise in the stockmarket has revived private investors' appetite for equities, says Andrea Page in Bloomberg Money. And it looks like most of those getting back in are doing it over the internet: according to stockbroking analyst ComPeer, in the second quarter of 2003 online share dealing volumes rose 42%. But the market is hugely competitive, so the choice for investors is huge. How do you find the right online share dealing service for you?

Think about price

Even if you are into an active trader, you can still deal online for a tenner or less. Hoodless Brennan (£7), Hargreaves Lansdown (£9.95), Ample (£10), and American Express Sharepeople (£12.50), all offer flat dealing rates online. ShareDealActive and Comdirect also have flat rates (£9.50 and £12.50), but they also allow you to do deals by phone for no extra charge. Other brokers still charge fees based on deal size. The Share Centre, for example, charges 1%. Keep an eye out for other charges too: some brokers charge a monthly or quarterly fee on top of dealing costs and others charge for inactivity. "Check the small print," says Andrea Page. You can compare the deals from different brokers on www.moneysupermarket.com.

Look for extra services

If you are returning to the market nursing bear market losses, you may be keen to limit your downside and automatically lock in gains, says Andrea Page. Ample and ShareDealActive offer free stop losses. You might also look for a broker that offers limit orders (where you can set a minimum sale price or maximum buy price), such as Barclays Stockbrokers or the Share Centre.

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Do you need advice?

The online brokers have tended to steer clear of actually offering advice, says the FT. They focus more on execution-only broking: you tell them what you want and they do it. However, the likes of Barclays Stockbrokers and NatWest Stockbrokers offer an advisory service allied with the ability to trade online.

What else can you buy?

Most UK brokers offer online trading in overseas shares via the LSE's International Retail Service for similar prices as they charge for domestic shares. Many online dealing sites also offer fund supermarkets that offer discounts on a fund's initial charges and allow you to set up Isa and self-invested personal pension accounts. Hargreaves Lansdown, for example, claims to cut initial fund charges to an average of 0.25% and also pays out annual loyalty bonuses on around 900 funds. For Isas, why not look at Share Centre, says Shares. The company is developing a FasTrack account especially for Isa customers, which offers stop losses and tracking stop losses (these follow the share price up and at the point the price turns tracks the fall from the peak, hence locking in gains rather than stopping losses).

What about research?

Self trade is introducing a new range of research material to include company reports and brokers' tips, while American Express Sharepeople provides information on "key market events" that might affect portfolios, as well as charting tools, says Shares. For those who trade more than 30 times every three months, it also offers real-time market data. Barclays Stockbrokers also offers a "comprehensive range of independent research", says Shares. However, don't just use your broker for research, says the FT. Sites such as www.citywire.co.uk, www.ftyourmoney.com and www.thisismoney.com are all worth visiting too.

Look for incentives

TD Waterhouse is offering those who transfer from another broker £10 per line of stock transferred up to £100, plus up to four months' worth of commission-free trading, dependent on your trading history. IMIWeb will cover your existing broker's transfer fees up to £60 and Comdirect up to £100, while Hargreaves Lansdown will reduce its dealing charge to £4.95 a trade for your first 30 days with them, says Page.

Who's the best online broker?

Our readers particularly like Comdirect, says Shares, for its excellent stop loss and limit order policies, plus the "added bonus" of its research offering. Share readers also rate TD Waterhouse highly, because of its speed in executing trades and its reliability, and Barclays for its execution-only service.