Online Stock Brokers
Online stock brokers - tips for choosing a good broker
Online stock brokers are one of the most popular means by which to trade stock online. Should you choose to open an account with an online brokerage firm, they will be the central link between you and the markets. A broker can literally make or break you and it is therefore essential to choose a broker who has the correct expertise and knowledge to handle your portfolio properly. Listed below is a simple three step guide to choosing a first class online broker:
Determine your trading objectives
Before beginning your search for a broker, establish exactly what it is that you want to do. Ask yourself questions such as how often are you going to trade, how much money do you want to invest and whether you are going to need a broker who offers a full spectrum of services or a broker who offers discounted services. It is pointless paying exorbitant administration fees for a full service broker if you only intend to experiment with the markets occasionally.
Compile a shortlist and research backgrounds
Compile a shortlist of all the brokering firms that you think would be suited to your individual needs. Check the rates and commission percentages charged by each as well as which markets they specialize in. Reduce your list to two or three reasonable and suitable firms. Next, run a security check on the brokers on your list. The NASDR, a subsidiary of the National Association of Securities Dealers (NASD), has a database of information about all registered online stock brokers. You can apply to have a detailed report sent to you through their website. Check for any security violations, fraudulent activity or disciplinary action that has been taken against the various broker firms.
Establish contact with a broker and allow them to sell themselves to you
Once you have done a formal security check on a broker, call them up and ask a few questions of your own. Recommended questions to ask include the following:
- Where is the firm based?
- How large is their client base?
- What is their track record like?
- What kind of encryption system do they use?
- What kind of firewall system do they use?
- Are they insured and will your funds be protected should something go wrong with their business?
Assess their attitude and manner with you on the phone. Genuine, professional brokers will have no problem answering any queries you may have, and should be able to do so almost instantly. They will also realize that it is their duty to sell themselves and their services to you. There are hundreds of brokers out there, and if the broker you contact does not make you feel comfortable and important right from the start rather walk away.
For a comprehensive list of online brokers, visit the investor guide website. The site lists over 100 online stock brokers, complete with a short description on each and their respective rates.