Different ways of buying

With the advent of the Internet, the private investor now has access to a much wider range of trading alternatives than before. There are three basic types of dealing now available to the on the Internet:

'At best'

In the past, investors have generally bought shares 'at best' or 'at best price'. These phrases mean that the broker (either electronically or by phone) has gone to the market and sought the best possible current price. The buyer or seller will not know the price at which the deal has been executed until after the event. This is still the most popular form of dealing.

There are two further ways of dealing which are becoming more widely available. They both allow the investor to be sure about the dealt price.

'At quote'

Dealing 'at quote' occurs when you instruct your broker to seek a quote from a market maker. The market maker will then offer you a quote for the number of shares you want to trade. You will then have about 20 seconds to decide whether or not to accept the quote. If you accept it, the deal goes ahead as per normal, if you reject it for whatever reason, no deal will occur.

'At limit'

There is a third system which is coming into use for private investors. Called dealing 'at limit', it is a means of getting the advantages of dealing at quote without having to seek repeated prices from market makers (who may get cross after a little while). What happens is that you preset a price at which you want to deal a given number of shares (it can be a buy or sell order). When the share falls or rises to the price you have set, the deal automatically goes ahead. The main disadvantages are that you have no guarantee that the price will reach your limit; or if it is reached, the price may have moved further anyway.

Firms can already use text messaging to alert you of changes to your portfolio. This allows you to keep much closer to your position in the market. We are now on the threshold of further changes to the way shares are traded. WAP (Wireless Application Protocol) technology means that you interact with information from the Internet on your mobile phone. As a result you can trade from anywhere your phone can get a signal.