What Do You Need From Your
Stockbroker?
There’s no “one size fits all” in the world of
stock-broking. An old lady with a $200,000 inheritance to spend and no knowledge
of investments will have a very different need from her broker than a swing
trader who skips in and out of trades several times a week.
Here are some of the factors that will impact your
choice of broker:
- How
much money you have to spend – those with budgets of $100,000 and more
who would like a professional to invest it on their behalf may be best off
with a discretionary service, particularly if they have a very limited
knowledge of investing. Beware however that if you choose an advisory
service of any type, if you’re putting less money on the table then
you’re more likely to get a junior advisor.
- Frequency
of trading – If you’re a frequent trader who trades several times a
week (or day) then brokerage costs will be far more of an issue than a long
term investor (who may only make a handful of trades every year). If you do
make frequent stock trades, and know what you’re doing, then you may be
better off with an online execution only brokerage service. This type of
service tends to be least expensive with some stockbroker companies offering
execution trades for just a few dollars. Other brokerage houses also offer
special deals that benefit frequent traders, with special rates and a host
of tools to facilitate traders.
- Knowledge
& experience – if you’re a hotshot who’s on the ball then
you’re not going to want to spend the high fees associated with advisory
stockbroker services.
- What
types of products you will trade – some investments, such as Ofex and
other small markets, may not be freely available with some execution only
online brokers. The same may be true of stocks in particular global markets.
For those wanting to trade such irregular products, an online execution only
service may not be suitable.
- Will
you be paid interest on any cash balances? If you have a large
amount of capital that moves in and out between the form of stocks, bonds
and cash then you will want to ensure that your broker pays interest on any
cash balances you may have.
- The
type of trader you are – we’ve touched on this on other points but
the category of investor/trader you are will determine the type of brokerage
account that will suit you best. Day traders often trade on very short time
frames and may require more sophisticated brokerage & system options
than a longer-term investor.
Once you analyse these issues you will have a clear understanding of what you
need from a broker, and which type of broker may suit you best.
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Choosing A Stockbroker - An Introduction
Types Of Stockbrokers
What Do You Need From Your Broker?
How To Open An Account
The Advantages Of An Online Broker Account
What Factors To Consider In Choosing An Online
Broker
Reputable Online Brokers
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