Daval

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With all these viruses and computer hacker stories that you see in cheesy movies, we certainly understand why someone might feel uncomfortable leaving his or her financial information inside somebody else's computer system and making transactions through the Internet. Fear not. There's a heckuva lot of protection built into the system.

While concerns about online security will always be there, rest assured that the brokerages themselves have a very, very high stake in making you feel comfortable about the level of security being used. All online brokerages have a portion of their website devoted to explaining the measures they employ to protect your transactions. While it may be true in this world that nothing is perfectly safe, online trading is certainly as close as offline trading in providing safety in your financial transactions.

If you are making securities transactions that take place over the Internet, make sure that your brokerage is using high-end encryption. Encryption is the process developed by super-genius computer nerds -- but, you know, the good kind -- to scramble data so that only the intended receiver can use it. The higher the number of bits in an algorithm, the more sophisticated the encryption. (Repeat this last sentence three times, memorize it, and use it liberally in cocktail party conversations, particularly a conversation you wish to end.) A 128-bit algorithm is the encryption level used by most online brokerages. It's the highest level of security currently allowed by U.S. law.

Is 128-bit encryption enough for you? Stealing information that is encrypted at that level is virtually impossible -- even if it does seem awfully easy when you watch those movies about basement-dwelling unemployed computer hackers.

What you should pay attention to is whether the security measures are operating while you're making your transactions. Depending on what browser you use, you'll either see a closed padlock icon or a key icon to demonstrate that security is operating. When you see that those icons are unbroken, you'll know that your transaction is occurring in a secure sockets layer. When you see these, you'll know that your transaction is being encrypted -- and accordingly, you should feel safe about what you're doing.

Additionally, online brokerage services feature passwords and personal identification numbers (PINs) that you select. Your PIN needs to be given every time you make a transaction within your account, and you can change your PIN as often as you like.

Also, no matter which brokerage you're selecting, make sure it is insured by the Securities Investor Protection Corporation (SIPC), which provides up to $500,000 of coverage (limited to $100,000 for cash).

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Force 10

Online finances in general are more secure then a paper trail, IMHO.

yotta

Bullshit. There are no laws in the united states restricting the use of cryptography. 256 bit encryption is supported by newer web browsers.

This article also does not mention that SSL is worthless when you choose to accept an invalid certificate, because it it's easy to run a man-in-the-middle attack on SSL, the browser will pop up an error about an invlaid cert, and the luser will click 'accept anyway', and be 0wned.

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Aletheia

I have no issues with buying online and I see none that are anymore dangerous then buying in a store.

Cynthetiq

It's not any different than handing your credit card to the waiter or waitress. EQUALLY secure.

The burden is on you for diligence to monitor your accounts, even on a weekly or daily basis, monthly at a minimum just like you do with your normal banking.

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Dilbert1234567

i trade online (or used to alot) and it was just fine.

just dont be dumb about it, keep your system up to date and dont be an idiot.

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