Online Stock Broker
Choosing an Online Stock Broker is not easy. On this page, I try to make it easy
The best way to go about this process? Set you criteria! Know what you are looking for..
There are two common types of brokers, the Discount Broker - who is primarily going to be an online company, and the Full Service Broker - who primarily is an offline company.
To decide which one to use, here are a couple of things to consider:
1. What type of trading do you intend to do? In other words, are you looking to day trade, swing trade or buy and hold?
2. What type of services are you looking for? Are you looking for research and advice, retirement planning, tax tips etc?
3. How much are you willing to pay? Obviously the full service broker comes at a much higher price than the discount broker.
4. What type of online stock research are you looking for?
Or should I say at what level?
In other words, are you looking for streaming real-quotes? Are you looking for automated trading capabilities? more powerful trading capabilities in general?
5. What level of customer service are you looking for? Levels can vary widely. How quickly do they answer the phone when you need to reach them?
6. What other options do they have for you to communicate with them - email? live chat? What is their response time with these options?
Finally, make sure they have their deposits backed by the Securities Investor Protection Corporation (SIPC). SIPC's focus is protecting and restoring your funds.
Who exactly is a Discount Broker?
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Discount brokers are firms that offer low cost commissions to the investor. These firms are able to do this because they provide the basic services needed by the investor to makes trades online.
For example - the firms do not offer investment advice. In addition, the firm will not create the stock order for you.
However, increasingly they are offering research services where you the investor can conduct your own research.
For an additional fee you can also get upgrade services and capabilities.
And who is Full Service Broker?
These firms on the other hand boast of licensed stock brokers that can offer a wider range of services like investment advice, personal finance planning, retirement advice as well as a platform for self directed online trading.
In general, these firms will usually cater to higher net worth individuals looking for someone to provide research and financial advice for them, either at higher commissions or a percentage fee based on total managed assets.
As a beginner investor - Use online discount brokers.
Using them allows you to minimize your commission costs.
In addition, because these firms provide online research, you can learn and become more adept at trading as you conduct your individual research.
The downside? Mistakes!
But I subscribe to the old adage - "give a man fish, you feed him for the day, teach a man how to fish, you feed him for a lifetime"
Ok - now I provide you a