Dear IIS Customer: The explosion in technology investing continues. Both the high prices of many technology issues and the ease with which "unsolicited orders" (online or otherwise routed) may be placed raises the possibility that some investors might ignore prudent investing principles and subject themselves to an inordinate amount of risk. Last year, SEC Chairman Arthur Levitt released a public statement warning of the potential dangers of undisciplined online investing. In it, he outlines three "golden rules" for all investors, with which we at IIS wholeheartedly agree: 1) Know what you are buying. Do your homework before buying or selling a stock. Look at the fundamentals and understand the company's products and services. 2) Know the ground rules. Today's markets are moving faster than ever. It's imperative to know the rules under which you transact. 3) Understand the risks. All stock investments entail risk. Keep in mind that stock prices go up and down, and you can lose money at any time. There are several other key issues you should bear in mind when assessing your current investing strategies. Market and Limit Orders: Stock prices can be extremely volatile, especially in the "hot" technology and Internet sectors. A stock may be up $10 one minute and down $10 the next. One way to protect yourself from getting an unexpected price when placing a trade is to use a limit order. With a limit order, you can establish the maximum price you're willing to pay for a stock or the minimum price at which you're willing to sell. When the limit price is met or exceeded, your order is filled as soon as market conditions allow. Unlike a market order which is typically executed at the prevailing market price in a matter of seconds and may be difficult to cancel, a limit order may be cancelled any time prior to execution. See our commission information. The SEC's Investor Education and Assistance site has a wealth of helpful resources and information for online investors. The web address for this site is as follows: http://www.sec.gov/oiea1.htm Delayed Trade Confirmations: With the huge volume of securities being transacted online, you may occasionally have trouble getting initial trade confirmations immediately after execution. The fact that you did not instantaneously receive a trade report does not mean that your order has not been filled. Avoid the temptation to re-enter the order; otherwise, you may end up placing multiple live orders for the same security that cannot be cancelled. You can check your Open Orders to verify that your order has been placed. The Risks of Margin Trading: If you decide to trade on margin, you should fully understand all of the risks involved. A sudden drop in the price of a stock could cause you to receive a margin call. In this case, you would be required to deposit additional cash or securities into your account. If you do not respond in a timely manner, your stocks could be sold to cover the call, and you would be held responsible for any losses. To reduce risk, don't overextend yourself. Maintain account equity well above the minimum margin maintenance requirements, and be aware that maintenance requirements on certain stocks, especially highly volatile issues, can change at any time. After Hours Trading: The ability to trade after the markets close is an exciting innovation for individual investors. However, it involves unique risks. For example, prices among the various after-hours trading systems are not consolidated. As a result, you may not know when better prices for a security are available elsewhere. Secondly, after-hours markets tend to be less liquid and exhibit wider bid/ask spreads than the traditional daytime markets. There can be no guarantee that after-hours trading will provide you with the best prices, or that your order will be executed. Realistic Expectations: When it comes to investing, it's important to have realistic expectations. Don't be misled into thinking that frequent or day trading is a source of "easy money." These strategies can be extremely risky. If you're new to investing, you'll find a wide variety of high-quality information and investment tools available on our site to help you learn about the markets and formulate your long-term investing strategy. Unsolicited orders (purchases) are based on the principle that control of your investments is in your hands. But along with that empowerment come some important responsibilities: To invest smart, know the ground rules, and understand the risks. Do your homework and take only the financial risks that you are personally comfortable taking. IIS will continue to provide more and better educational resources as part of our ongoing commitment to your long-term financial success. SEC INVESTOR EDUCATION SITE