subject: Should You Settle For A Full Service Stock Broker? [print this page] After coming up with a tailor made trading system, the final step is for you to get the best stock broker in town. You can't afford not to get only the best. After all, you are putting a whole lot of cash in trading and you would want your broker to help make your investment pay off.
You can choose between two kinds of brokers. One kind is the full service provider while the other kind is the discount service provider. These two types differ on the level of help that they provide to traders. Many neophyte traders may immediately opt for full service experts because of the belief that their money will be in better hands. This may be true in some cases but there are some traders who don't really need to pay for full service. You need to evaluate your circumstances first to find out if full service is applicable to you or not.
Getting a full service stock market broker can have some advantages. If you are an inexperienced trader or one who does not have time to perform trades, this will be a good choice for you. You can easily ask your service provider for advice before you decide on anything. They therefore function in a capacity that goes beyond placing trades. In a lot of cases, the pieces of advice that traders get are sensible and appropriate because they are based on good, solid research.
Because trading technical advice is highly sought after, getting full service seems sensible. The truth though is that it is only really a good idea if you don't have a very stable system in place. If you do have a good trading system, you might be better off with discount stock brokers. If your trading system has been back tested and you are confident that it is reliable, then a full service broker can only make matters confusing for you. His inputs may clash or contradict with your system.
One other downside to a full service provider is the cost. Commissions can be set at more or less 1%-2%. Discount brokers may ask for only half this percentage because they don't offer extra advice. This is one more good reason to settle for discount stock brokers.
Both broker choices can be good for certain traders depending on their circumstances. Hence, the best choice depends on the individual trader's skill and situation. You can use the good advice of full service brokers if you truly need good advice. If you feel however that you can perform better when you are in control, then you can choose cheaper broker services.
It should be noted though that even if you do choose to pay a brokerage additional fees for advice, it's important to try to develop your own trading plan. This is the only real way you can manage your risk levels and keep your losses at figures that you are comfortable with. Even with the best stock broker and full service advisor a custom plan is still a crucial element to make.
