Four Points To Consider Before Getting A Stock Market Broker

To invest in stocks, it goes without saying that you need a stock market broker

. This is even if you want to handle the details of trading yourself. Only a brokerage expert or company can place trades for you. It's therefore important to make the right choice. Here are four points to look into as a guide to help you pick the best option.

Commission Rates

There is no reason for brokerage companies to lie about how much they get out of your trades. Getting the rates of prospective services is therefore pretty straight forward. You can expect rates that fall anywhere between $40 and $100. What you should carefully look at is what these figures include. A lot of stock market brokers that charge more than $40 offer extra services and are thus usually known as full service providers. They offer advice, tips and research data. Paying extra is therefore only appropriate. Do remember though that if you already have a solid trading plan of your own, you may not need to get a full service provider.

Extra Fees

Commissions aren't the only expense involved in trading. You also need to pay a handful of fees. Unfortunately, some of these are hidden so you only get wind of them once a brokerage firm starts asking you to pay. Make sure from the very start that you ask what additional fees there are and how much these will cost you. Depending on the stock market broker that you pick, you may have to pay for transfer fund charges, insurance and penalties. If you get a full service provider you will have to pay extra for insider tips or advice.

Service Reliability

Not all services place trades in real time and not all of them offer different ways to place trades. You may be at a disadvantage if you opt for manual services that don't have backup systems for indicating your preferences. These are simply too unreliable. If a system glitch affects the primary portal to access your accounts, it may take hours or even days for you to act on a dwindling account. Also, manual stock market brokers can take time to act on your wishes which means the entry or exit point that you've identified may have already been missed by the time action is taken.

Size of Deposits

These days you can open a start up account with discount services for $100. Most well known, full service providers however require minimum account balances of around $10,000 to $50,000. Of course, the more you invest, the more you can expect huge profits in the event that you do pick the right positions. Do keep in mind though that opening an account, with thousands of dollars at stake, increases your investment risks. You will, after all, be entrusting your cash to a company you may know very little about.

Your choice of a stock market broker definitely plays a big part in your trading career. You may know a lot about technical analysis and you may have the perfect trading plan but these will amount to nothing without the right brokerage service. Pick the appropriate one for you based on these considerations.

by: Jimmy Cox

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