How to find the right broker for you

Posted by admin as shares and stocks

There is no doubt that when you are looking to choose a stock brokerage you should take your time as your decision could have a big affect on the returns you earn from your trading activities.

There are two main options, firstly there are discount stock brokers. These brokers basically just give you the barebones.

The other option is a full service broker. Full service brokers offer you all the services a discount broker offers. They also offer many additional services including retirement planning, trading help and advice, information on tax, risk management strategies and much much more.

For most investors, a online discount stock broker will be the best choice. Most investors, especially experienced investors do no need the additional services of a full service broker. Even if an investor would find the services of a full service broker useful, they are often not able justify the additional expense.

Typically discount brokers charge between $3-15 per trade. On the other hand a full service broker will often charge well in excess of $100 for a single trade. Look out for sites offering discount stock broker information.

Clearly this is a huge difference. Paying very big commissions means you would have to make a lot higher returns on your trading activites just to break even after paying all the fees.

There are also other important factors to consider when looking for a brokerage firm. What is their support like? Do they offer after-hours trading? Are there extra fees in the terms and conditions? Is their execution quick enough? Which payment methods do they take and how promptly do they send you your money when you request it? Who regulates them?

Let me show you a quick example of how much of a difference the commissions can make. If you make 20 trades per month and your account balance is $10,000 you will pay $100 per month in fees at $5 per trade and $2000 per month at $100. You can see how the fees can adversely affect your account balance in no time at all?