ONLINE INVESTING the Smart Way

Perhaps you've been buying stocks through a large, full-service brokerage firm but have not been particularly happy with the advice you've been getting. Now your broker has left the firm and no one has followed up with you. You are stuck with investments you don't know whether to hold or sell.

Or perhaps you feel pressured by a broker who may be more interested in earning commissions than in growing your capital. Whatever the reason, you believe now may be the time to take control of your own investment transactions.

Millions of individual investors have taken the first step and opened an account with an online broker. One such investor told a reporter, ''I've always been into computers, and the ability to do my own thing and not have to interact with a broker appealed to me." In the six years he has been trading electronically, he has used three different brokerage firms, switching whenever lower prices, greater convenience, or extra services enticed him

If you are prepared to go it alone, you will find an increasingly friendly environment online. Many Web sites offer demonstrations of how to set up an account or execute a trade, but some sites require you to register even if you're just browsing, which can slow you down.

Commission schedules are clearly displayed. Understand, however, that the lowest fees generally apply to stock trades. Not all brokers trade mutual funds, and those that do may charge a different commission. You also may pay more to trade bonds or options, or to enter a limit order to buy or sell a security at a specific price. For instance, Ameritrade Holding Corporation (www.ameritrade.com) charges a flat commission of $8 on market orders for stock. There is an additional $5 charge for stop and limit orders. Low commissions are a boon to frequent traders, but small investors may be disappointed. Online brokers often have large minimum-balance requirements. One broker, which charges a flat $12 commission, requires a balance of $10,000.

You can access online brokers through commercial services such as America Online, CompuServe, and Prodigy, but you generally will find the lowest commissions on the Internet. For example, if you use Quick & Reilly through America Online, you will pay the standard commission less 10 percent, which would be $73.35 for 500 shares of an $18 stock. That compares with a flat fee of $14.95 for all market orders, and $19.95 for all limit orders up to 5,000 shares on the Internet. For the fastest and best service, you need a powerful and secure Web browser, such as Netscape Navigator or Microsoft Internet Explorer; some sites are not accessible with anything less.

Many investors also worry that a hacker will crack the system and see what they are trading. Again, online brokers can't guarantee that won't happen. But they say such an invasion of privacy also could occur if you use a traditional broker with whom your telephone conversations might be overheard or your account statements photocopied. When your statements are mailed over the Internet, they have greater safety because they are encrypted. There is also the fear that someone will be able to tap into your account and transfer your retirement funds to an offshore bank.

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