It has been said that choosing the right broker is as important as choosing the right stock so we are pleased to offer our readers some basic lessons that should help you make the best possible choice.
Tip 1: Don’t be too attracted by a discount deal for part-time support. You want your broker to be in there pitching for you so go for a full service account. Pick up the hints and knowledge and who knows – you may soon be doing it all yourself.
Tip 2: Check out each broker’s website – not just once but at several times during the day. You can judge by the way that figures are or are not updated just how much “on the ball” your potential broker may be.
Tip 3: How flexible will your broker be in terms of making trade? Supposing you are away from your computer – and it’s bound to happen! What trading alternatives do they offer such as you sending a fax, using a touch telephone or just speaking? But make sure you find out if there is an extra charge for these alternatives.
Tip 4: How do you find out how good (or bad) any supplier might be? Simple answer, ask their customers. If your potential broker is unable to give you the name of one of his long-term clients, then you might have reason to suspect the quality of his service.
Tip 5: Getting the lowest commission rate may not be the best criteria on which to judge a broker. Low price might just mean low quality service. The average price per trade is reckoned at $20 but we have seen a range of prices between nix and $50. As always the devil is in the detail so have a good hard look at the small print on any broker’s advert and find out exactly what you are getting for your fee and what extra services you will have to pay for. These might include limit orders and options as well as trades over the phone. Ask before you decide!
Tip 6: You are almost certainly going to be asked for a minimum deposit but how minimal will that minimum actually be? Some firms have been known to ask for as much as $10,000 which may not be quite the budget that you had in mind!
Tip 7: What else is on offer apart from trading in stocks? There are so many different investment opportunities available and it would be preferable surely to be with a firm that could provide a full range of options. Some even offer banking and credit card services which might come in handy.
Tip 8: Do you like being kept waiting? Just think how frustrating it would be to be signed up with a broker who you could never get hold of. So before you make a final decision, put in a fake call and see how long they take to respond.