| The choice of a stock broker is a personal one. For | | | | With the advent of online brokerages the overhead |
| somebody the ideal stockbroker might not be right | | | | of owning a brokerage has reduced significantly and |
| for someone else. Since brokers are an integral | | | | the competition has increased significantly. That is |
| element to your trading success its important to pick | | | | why brokers have lower balance requirements. We |
| the best one for your needs. So where do you | | | | would recommend that you only invest money left |
| start? Begin by identifying what your requirements | | | | over after you have 6 months of expenses kept |
| are. The following are some criteria you should keep | | | | aside in a savings account. When you invest you do |
| in mind whether you are picking a personal broker or | | | | have access to the money all the time because |
| an online one: | | | | stocks are a 'liquid' investment i.e. they can be sold |
| Commission | | | | quickly but if you are forced to sell at a time when |
| We are not suggesting that you should base your | | | | the timing isn't right you could incur unwanted losses. |
| decision entirely on commission i.e. Eliminating brokers | | | | Thats why we advise keeping aside a rainy day fund |
| with highest commissions and falling in love with | | | | in CDs or a savings account. |
| lowest commission brokers is not the right thing to | | | | Miscellaneous fees |
| do. You should use commissions as a filter during your | | | | There are always going to be hidden fees with |
| screening process. If the broker is charging you $30 | | | | personal or online brokers. Its important to ask for all |
| per trade and you think you are going to be trading | | | | the documents upfront and go through all the fine |
| frequently with little or no guidance then those | | | | print available. Of course this isn't going to be fun. |
| commissions will add up real quick. It all adds up. So, if | | | | But, its a very necessary evil. We would recommend |
| you are a newbie investor and think you would like | | | | looking up 'broker name hidden fees' in a search |
| extra guidance often then go ahead and pay those | | | | engine to get quick results too. Since nobody likes |
| extra commissions. On the other hand, if you are | | | | hidden fees they like everyone to know about it. |
| familiar with certain industry sectors and have traded | | | | The 'inactivity' fee is an example of miscellaneous |
| before you might not need any hand-holding. Then | | | | fees. This is one of the rare occasions where the |
| you should be looking for lower commissions and the | | | | phrase is just as simple as it sounds. If you aren't |
| remaining criteria for screening. | | | | 'active' enough you might have to pay a fee either |
| Minimum Account balance | | | | directly or through increased commissions. Read the |
| Some brokerage firms ask that you maintain a | | | | fine print twice! |
| minimum balance before you can trade with them. | | | | |