How to Choose the Best Online Stock Broker
Choosing the "best" online stock broker is vital to trading successfully
, since the broker will be responsible for carrying out your investment trades and maintaining your accounts. However, finding a good online stock broker can be quite perplexing due to sheer amount of investment firms and banks vying for your business. Everyone claims to offer the "best trades" and the "lowest prices." So how do you decide which online stock broker best meets your needs?Comparing Online Stock Brokers
While choosing an online stock broker, the first thing to take into consideration is whether you need a full service or a discount broker. While full service brokers offer a comprehensive range of services, discount brokers generally only execute trades on behalf of the clients. As a result, discount brokers generally charge lower commissions. Some other parameters to compare online stock brokers on are:
1.Trading platform: Online trading can become quite confusing and cumbersome, if the software provided by the online broker lacks ease-of-use. If the broker's website takes too long to load or is too confusing, your trade result can be grossly affected.
2.Products offered: When choosing an online broker, people generally only think of stocks. However, some online brokers deal in other investment vehicles as well, such as futures, options and gold contracts. If you seek diversity in your investment portfolio, find online brokers who manage multiple investments.
3.Minimum deposit: Most online stock brokers charge a minimum deposit to execute, which may be as high as $10,000. Evaluate your financial capacity and choose a broker accordingly. Note that some online stock brokers do not charge any minimum deposit, although this might mean compromising on some additional services.
4.Other costs: Beyond brokerage fees and commissions, most online stock brokers charge some hidden fees. This includes asset transfer fees, annual maintenance fees, account closing fees and inactive account fees. Clarify this beforehand or you might end up paying more than you earn.
5.Customer service: Since online trading may become boggling at times, it is important that the online broker maintains appropriate real-time over-the-phone and online customer service. Lack of proper customer service may leave you confused and frustrated. Also, ensure that the online broker's customer service provides regularly account statements, for you to track your progress.
Finally, note that the right online stock broker can make or break your progress on the stock market. Good brokers undertake research activities to keep their clients abreast of the best strategies to optimize returns from stock trading.
How to Choose the Best Online Stock Broker
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