An online stock broker is always needed if you’re going to trade stocks online. It’s common sense actually, because there’s no way around that.
Luckily, you’ll find countless number of stock brokerages while you’re looking.
They’re all ready to sell themselves to you by promising what they think you’d want to hear. However, you’re the one who’s making the last decision at the end.
In order to make the right decision you have to know what you’re looking for from an online stock broker. Many of you may not even know their characteristics and how differ from one another.
While some of you have a very clear idea on what to look for. If you’re one of the stock traders or one who’s looking to start trading and don’t know anything about stock brokerage, this one is for you.
Hopefully by the time you finish reading this blog post you’ll learn some new things that can help you throughout your trades.
What’s an online stock broker?
You can find many other good definitions to this term, but Business Dictionary defines it as followed.
A brokerage firm that interfaces with its customers over the Internet rather than at a brick and mortar office location. Online brokers tend to offer lower fees and investor resources.
Like you’ve just read, online stock brokers are cheaper. Who wouldn’t want to pay less for a service? I know I would, and I’m thinking you would want the same as well.
When you’re trading stocks anytime you find a way to spend less on fees you should always take the advantage.
In fact the fees you’re getting charged are one of the key factors to look at when you’re signing with an online broker.
You should also know that there are two main types of stock brokerage. There are full service brokers and discounted ones.
They provide different fees and services. You would want to look at their fees to ensure that you’re not getting charged too much.
Reasons to look at the fees
You may think that the fees you’re getting charged by your online stock broker is not too much since it does not look high actually.
But once you start making transactions (buying, selling) more than you thought you would have to. The fees start piling up on you.
It does not take much time to spend a good amount of money only from fees that you’re paying your broker. If you’re unfortunate and losing money from trading at the same time.
Your portfolio can suffer a great deal. Another important aspect to look for is the following.
Method of deposit and withdrawal
This one is very important, I’ve experienced how it feels to be with an online stock broker where it’s so hard to make a deposit and have that money ready to trade.
A good broker will make it very easy for you to deposit as well as withdraw your money. You have to look for that because not all of them with provide you with such an easy access.
You can find some brokers that will enable you to deposit your money straight from your smart phone via checks. At the same time you may find some that require you to go to a bank in order to have your money ready to start trade.
I know once you open a brokerage’s account you would want to start trading right away. If you want to do so, make sure you sign with a broker that will enable your money to be cleared as soon as possible.
Does it have 24 hour customer assistance
You may not ever have to contact your broker at 12:00 AM, but it’s always an assurance to know that you can make a phone call any time you may need to.
Especially for an online stock broker, having a 24 hour customer service assistance available to take phone calls is a plus.
Some of them may not even have a branch in your city where you can go and get information. A phone number of your broker may be the only way to get in touch with them.
The reputation of the broker
Lastly, register with a broker that has been around long enough and well recognized. The new ones may be somewhat cheaper, but you would want to have a peace of mind while trading.
You would want to trust your broker, it’s your hard earned money on the line. You can’t trust your money with any organization, you have to know if they are what they pause themselves to be.
Nasdaq states, “The recent financial crisis has dissuaded some people from this line of thinking, but the question of how much you should be considering reputation when you’re comparing online brokers remains. As much as people might want to find good deals, and are suddenly a bit warier of some of the big players, the potential for fraud or simply poor service still exists.”
With that being said, you have to be careful with your pick, you may find a few brokerages out there trying all they can to take your money illegally.
But if you do educate yourself and know about them, you should be in good shape. It’s not for no reason here in Penny Stock Traders we always stress on trading education.
Until then, good luck on your trades!
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