When determining how to buy stock, the most important decision you have to make does not actually involve stocks, bonds or mutual funds. Figuring out which stock to buy requires you to make an important decision first: what brokerage service to use? Finding a broker or brokerage service on the internet is easy. The harder question is, how to choose the right broker?
Don’t Pay Huge Commissions: Consider starting out with an online broker. Using an online broker could be dangerous for novice investors who do not understand which stock to buy. However, using a full service research firm, that doesn’t take commissions on your trades, gives you the ins and outs on how to buy stock in the market. As you become a seasoned investor continuing to use an account executive at Small Cap Resource provides you with entry and exit strategies, increasing your overall percentage gains.
Down Time Review: When you use an online broker, down time is extremely important. Before you sign up for a service, visit their website several times throughout the day, paying particular attention to trading hours. Review how quickly their sites load and click on links to make sure the site is functioning properly.
Online Broker ≠ Online Only: Most of us are on computers for a good chunk of the day, but we can’t always be on the internet. Find out if the online broker you are considering offers multiple trading options. Many online brokers offer alternatives like phone trades or mobile apps. Not all trading methods are created equal, you should find out how much these alternative methods cost before you use one; they could be more expensive.
Compare The Services: There are several differences to consider when picking a service. Some services require higher minimums or charge larger fees. Compare the services to see which one fits your specific needs. For your convenience, we have included a comparison of the top online brokerage services.
Fees: Using an online broker is a way to effectively save money, especially if you use an online broker in conjunction with an account executive service, like Small Cap Resource. Commissions for online trading range from a dollar to anywhere in the low teens, assuming you make the trade online.
Minimums: Some online brokers may charge a minimum to open and maintain the account. Take some time to review these minimums; it will give you a better idea of the service that is right for you. The nice thing about using an online broker is that they don’t traditionally require minimums over $2,500. This is another advantage of using an online broker versus a full service brokerage firm, which could have minimums as high as $10,000.
Products: Most people only think of stocks when they start to consider a brokerage service. However, many online brokers offer a wider range of products including Forex, Mutual Funds, Bonds, Options and Futures. These services aren’t always offered at every online brokerage.
Customer Service: Many online brokerage firms offer several contact options: live chat, phone service and frequently asked questions, to name a few. They do not all offer the same level or quality of support; you may want to try contacting them via live chat or with a call before you open an account.
Free Trades: Many online brokerage services offer a set number of commission-free trades, making online brokers that much more enticing. Don’t allow these commission-free trades to be the only factor you consider, but keep it in mind as you make your decision.