The first method to work with broker now known as „old-fashioned,“ is to pick up the telephone· and call your full-service broker. In this world of high-speed Internet connections, it's the most inefficient and costly way, but if you're comfortable with your broker and want to continue this way, by all means do so. Just be aware that you pay the highest commission rate of all order-entry methods, and those commissions shave a hefty chunk off of your profits.

Selecting an Online Broker

The next method is to open an account with an online broker and place your orders over the Internet. Find one that offers:

1. Access to real-time quotes, which means stock prices are current when displayed. For precise entry points, real-time quotes are a must. Some companies still give „delayed“ quotes, which are fifteen or twenty minutes old.
2. A Web site that is accessible and easy to navigate, with graphics that snap on the screen rapidly; also, pages that appear quickly when you move from screen to screen.
3. A well-organized order-entry screen built to guard against data entry errors. For example, are the „buy“ and „sell“ buttons far enough away from each other? I know lots of traders (I've done it) who, in a panic to sell a tanking stock, have accidentally doubled up on it instead of selling the original shares. That particular episode always adds excitement to the day!
4. A quick confirmation system, account balances, and portfolio updates.
5. Alternative ways of reaching the broker. What happens when the market plunges? Are orders accepted and filled, or does their system jam? If the Web site crashes from heavy traffic, can a broker be reached by phone, and fast?
6. Low margin rates; you'll be surprised at how they differ.
7. A reasonable minimum dollar amount to open an account, if any.
8. Automatic buy- or sell-stops. Make sure they will set them on Nasdaq stocks. All brokers will set stops on NYSE stocks (that service originates at the NYSE, the Nasdaq doesn't furnish it at this time). Most brokers will offer this on Nasdaq issues as a customer service benefit. Ask if the buy- and sell-stops are „day“ orders or if they can be „good-till-canceled“ (GTC). GTC sell-stops are particularly useful if you want to keep a core holding in your account while you go on vacation. (If the designated price hits your sell-stop, it triggers a market order and the position is automatically sol­d.)

You can also peruse the National Association of Securities Dealers if you want to find out if charges or complaints have been charged against your broker in the Individual Investors Services' Public Disclosure section.

Finally, ask other traders with online accounts what Internet brokers they use, and whether the brokers are reliable and efficient. Take your time and do as much research as possible.. Here is a selection of popular online brokers:

A.B. Watley www.abwatley.com

Ameritrade www.ameritrade­.com

Brown & Co. www.brownco.com

CSFBdirect www.csfbdirec­t.com

Datek www.datek.com

E*Trade www.etrade.com

Muriel Siebert www.msiebert.com

Quick & Reilly www.quickway.com

Schwab www.schwab.com

Suretrade www.suretrade.com

T.D.Waterhous www.tdwaterhou­se.com

Some investors start with an Internet broker and later transfer to the directaccess trading method.

THE COMMISSION MAZE

Commissions are a necessary business expense since, by law, your trades have to go through a registered broker. The rates vary from broker to broker. To make sense of the maze of commissions, remember that the most important service a broker can give you is to fill your orders-quickly and accurately. Generally speaking, the faster your order is filled, the better price you will receive. The higher the commission you pay to online brokers, the more „bells and whistles“ you have access to, meaning charts, real-time quotes, fundamental analysis, and news. One option is to pay high commission prices (assuming they fill your orders rapidly and efficiently) and use their charts and research. The bad news: Many brokers' charts aren't detailed enough; they don't have the indicators and oscillators you need as a short-term trader for decision support. The good news: Many fine charting software packages exist in the marketplace. As I mentioned earlier, some reasonably good Web sites offer real-time charts and updated news. If you don't mind wading through their advertisements, some give you the information at no charge. So, an alternative is to open an account with a plain vanilla broker and obtain your charts and news from another source. Direct-access brokers also offer a range of commission structures. They are usually more intricate than online brokers, so if you want to open an account with one of these brokers, make sure to request a detailed list of charges.

On balance, direct-access software usually provides high-quality, intra-day charts and streaming news, so you don't have to go elsewhere for these tools. Okay, are you out of breath yet?

Let's sort this stuff out: Option: If you intend to jump into short-term trading with both feet and make it a big part of your life, consider opening your account with a direct-access fmn that offers level II order-entry capabilities. Option: If you intend to wander into trading at a slower pace and trade on a part-time basis, an account with an online broker should be sufficient. Option: You may want to venture into the market with an online broker, then transfer to a fancier direct-access system when you feel comfortable.

Know this: The least effective way to learn how to trade is to take on too much at once, then crash and burn because of information overload. Develop your own style that parallels your personality. Comfort is key to successful trading choices.

SLIPPAGE: WHAT IT MEANS

Slippage occurs when you put in your market order to buy or sell, and your order gets filled at a different price than the quote at that moment-higher if you're buying and lower if you're selling. A high degree of slippage can take place when you throw a market order to buy a stock that's „running,“ or rocketing up in price. Slippage also chews into your profits when you place a market order to buy a „thinly traded“ stock, which means a stock that trades on low volume (less than 300,000 to 500,000 shares per day). The market maker will see your lone order to buy at the market floating in, and he or she will „adjust“ the price a bit to suit his or her needs. He or she will drool a little, then raise the price a fraction of a point, and fill your order. (To date, this practice has become more prevalent on the Nasdaq than the NYSE, but I've seen it happen on both exchanges.)

The cure for slippage is to issue limit orders (your order will be filled at a specified price or not at all), or place your orders on a level-II screen through a direct-access broker.

To excel in short-term trading, you must learn the challenges involved. After all, the stakes are your hard-earned money. So, here's a reality lesson: The moment you enter a position, or purchase a stock, you're already „in the hole.“ Your broker's commission is added onto the price of the purchase. That could total anywhere from $5 to $25 or more. If you add ten cents a share slippage, you're a bit deeper in the hole. On 500 shares, that equals $50. So, if you paid a commission of $15 and add that to slippage of $50, you've already got a drawdown (paper loss) of $65. In order to climb out and profit, the stock has to rise at least eleven to twelve cents a share for you arrive at the even money point, and move even higher for you to profit. When you exit the trade, you again pay commissions and experience possible slippage.

MARGIN ACCOUNTS: HOW THEY WORK

When you open your account, your broker will ask if you want to designate it a, standard „margin account.“ The standard margin is called a „50-percent margin account.“ (Day trading accounts have different procedures.) That means whatever amount in dollars you deposit into the account, your broker will match your deposit with a loan of equal value. So, if you open an account with $50,000, your broker will automatically loan you another $50,000. Suddenly, you have $100,000 at your fingertips! Isn't that sweet?

But, wait. It's not time to start shopping just yet. As with any bank, your broker charges interest on the loan. The rate is usually low, and no interest is charged unless you actually use the money.

There are two reasons to open a margin account. First, as you become more experienced, the margin gives you extra buying power. Thus, you're „leveraging“ your money, or making more money (we hope) than the interest on the loan costs you. Second, the only way you can sell stocks short is to open a margin account. And believe me, in this volatile market, selling short can reap big profits. If you're an old pro in the stock market, you may already have a margin account. If you're new to this game, your best strategy is to open a margin account, then immediately forget you have the extra buying power.

One of the riskiest things you can do as a new trader is max out your entire account, margin and all. Please understand-when a stock you are holding on margin falls, you lose twice as much money as you would if you were playing with just your own cash. Gulp!

As a safety measure, when you first begin trading, forget you have a margin account and use only your original equity to trade with. Keep a portion of your account in cash at all times. Sound boring? Don't worry. The market will provide plenty of entertainment and excitement along the way!