The internet has revolutionised the way that private investors trade shares. Dozens of websites now offer remote access to UK and world markets, allowing armchair dealers to buy and sell at the click of a mouse. With small overheads, these offer transaction fees as low as £5 a trade. Most also provide tools, from company reports to e-mail market alerts, to aid stockpickers.

However, the range of options can overwhelm newcomers and the wide range of fee structures makes price comparison complex. The calculator at Moneysupermarket.com can work out the cheapest options based on your annual dealing. Kevin Mountford, of Moneysupermarket, says: “Price is a good starting point, but the right deal depends on individual circumstances, so it takes research.”

Mr Mountford advises beginners to pick a big name with which they feel comfortable, such as Barclays Stockbrokers (www.stockbrokers.barclays.co.uk), Hargreaves Lansdown (h-l.co.uk) and Virgin Share Dealing (share.com/virginmoney). Like most online brokers these list shares in the FTSE 100 index, the Alternative Investment Market (AIM) and some foreign indices.

Some services require new clients to make a minimum deposit into a trading account. At Redmayne Bentley (www.redm.co.uk), for example, this is £1,000. Others, such as Hoodless Brennan (www.hoodlessbrennan.com), have no set minimum. Your PC also has to meet basic system requirements, listed on the broker’s website, and a broadband internet connection is advised.

Most online services charge a flat fee for each trade, in contrast to the traditional norm of charging a percentage of the transaction’s value between set limits. Frequent traders are often rewarded with the best fees. At Barclays, for example, customers who make 11 or more trades a month pay £6.95 for each, while those who make six to ten pay £7.50 a trade. Conversely, brokers may bill clients an inactivity fee, of £5plus a month, if no trades are made. A minimum required trade of £50 is also common.

Online services are “execution-only”, as opposed to advisory or discretionary, so do not come with advice or portfolio management. Instead, most provide market-watching tools, supplied in-house or from providers such as Hemscott. Hargreaves Lansdown, for instance, offers free access to its share-tipping newsletters and online investment courses. Nevertheless, Mr Mountford advises investors to consult an independent financial adviser before making big trades.

While internet dealing has superseded traditional means, some traders prefer an online account that also allows telephone and in-branch trades at a fee. TD Waterhouse (tdwaterhouse.co.uk) is among those that offer this facility.

CASE STUDY: Learning from experience

Pauling Chung, of Cheltenham, Gloucestershire, has been trading shares online for five years. She opened her Hoodless Brennan account because it was “the cheapest around and easy to use”, adding: “I make about five trades a year. They aren’t big – in the hundreds of pounds.”

The 38-year-old software designer does not take independent financial advice, preferring to learn from newspapers and specialist magazines. “I do it all myself,” she says. “I am a lot more experienced than when I started.”

She says that the share-dealing platform is straightforward, with a number of tools to help her to track her investments, although these have not performed too well after the summer’s credit crunch.

Ms Chung’s partner also has a Hoodless Brennan account. Both see their share dealing as a hobby rather than a real money-spinner.

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