| If you are thinking about trading stocks and need to | | | | can get a better idea of either how large a trading |
| find a stock broker or are looking for a new stock | | | | account you need, the number of trades you should |
| broker there are a number of questions you should | | | | do in a year or how important it is to ensure you are |
| be asking yourself as well as your target stock | | | | paying the least amount of commissions possible. |
| broker, before you sign on the dotted line. While | | | | 10. Will I be using bracket orders? |
| many stock traders just sign up with a stock broker | | | | A bracket order allows you to place both a limit |
| because they offer low commissions or have a | | | | order and a sell stop at the same time. This is done |
| familiar name, choosing a stock broker that matches | | | | to always have a profit target active in the market |
| your trading style and account size can be the | | | | at the same time you have a sell stop in to either |
| difference between making and loosing money in the | | | | lock in profits or limit losses. Once one is hit, the |
| stock market. | | | | other is immediately canceled. Some brokerage |
| Before you start to look for a stock broker you | | | | houses will not do these types of orders. |
| should ask yourself a number of questions and try to | | | | 11. Do I want to do everything myself or do I want |
| identify your trading game plan. Here are some | | | | to talk to someone prior to placing an order? |
| questions you can ask yourself to help you find the | | | | If you want to do it all yourself then a discount |
| best online stockbroker. | | | | broker is likely where you want to look. However, if |
| 1. How much of a commission charge can I live with? | | | | you want to talk to someone about every trade |
| The price for a single transaction through an online | | | | then you should be looking at a full service broker. |
| discount broker can vary from as low as $1.00 per | | | | 12. What time frame will I be trading? |
| 100 shares to approximately $30 per 1,000 shares. | | | | If you are thinking about day trading then do not |
| Full service brokers may charge from 1 to 2% of | | | | consider a full service broker. On the other hand if |
| your trade or they may offer you a yearly rate. Not | | | | you think you will be investing in stocks (long term |
| only do you need to factor in these charges as a | | | | strategy) instead of trading (short term strategy) |
| cost of doing business but you have to be able to | | | | then, a full service broker may be what you need. |
| accept them such that they do not interfere with | | | | 13. Which markets will I be trading? |
| your trading. | | | | Make sure the broker you sign up with trades the |
| 2. How many trades per month do I expect to | | | | markets you want to trade. |
| place? | | | | 14. What is my trading style? |
| Some brokerage firms charge an extra fee if you do | | | | If you are using a discount broker, trading style likely |
| not place a minimum number of trades per month. If | | | | does not matter but if you choose a full service |
| these types of fees bother you, you should likely | | | | broker it will matter. Make sure your trading style and |
| look for another broker. | | | | your brokers align to save you a lot of frustration. |
| 3. Am I more likely to buy over the counter, penny | | | | 15. How many shares will I generally be buying? |
| or blue chip stocks? | | | | Some brokers charge per 100 shares while others |
| First, not all brokers will allow you to trade over the | | | | charge the same amount whether you buy 100 or |
| counter stocks so if this is what you want to do | | | | 1000. Therefore, try to match your buying style to |
| your brokerage choices may be limited. Also, if you | | | | the commission schedule. |
| are thinking a full service broker is what you need, | | | | 16. Do you want to receive a statement in the mail |
| make sure their trading experience matches what | | | | or will an email do? |
| you want to do. | | | | While many full service brokers send you a monthly |
| 4. What type of orders will I use to purchase my | | | | account statement in the mail and may also mail you |
| shares: market, limit or on stop? | | | | copies of each transaction, online discount stock |
| Make sure the broker you choose allows you to buy | | | | brokers may not do this. If this is important to you, |
| and sell the way you want to buy and sell. Most | | | | ask before you sign up. |
| brokers should offer all three methods of placing an | | | | 17. How much money will I be depositing? |
| order. | | | | If you are opening an account with a small amount |
| 5. Will I need to enter good until closed orders? | | | | of money make sure your broker allows it. Most |
| Some brokers allow you to place an indefinite good | | | | brokers have a minimum requirement to open an |
| until closed order and others limit the time that you | | | | account. If you are starting with less than $10,000 be |
| can keep such an order open. For instance, you may | | | | extremely cautious. While there are likely people who |
| choose to place a sell stop to limit your losses in case | | | | have grown a $10,000 account there are likely many |
| the market goes against you. If the broker removes | | | | more that have lost it. |
| your stop after a specific date and you forget to put | | | | 18. How fast do you want to get filled? |
| it back in you could face an unexpected loss. | | | | Although most brokers today get filled quite quickly |
| 6. Do I want the option of phoning an order in? | | | | some are still faster at completing a trade than |
| If you want the option of phoning in an order check | | | | others. If you generally place market orders, your |
| this out before you choose your broker. Some online | | | | order will likely be filled quite quickly. However, if you |
| stock brokers only do business through the internet | | | | buy on stop, some firms have a number of |
| unless there is an emergency and you need to sell | | | | processes in place that slow the order down |
| your open orders. | | | | potentially resulting in missed opportunities or higher |
| 7. What type of accounts (registered, cash, margin) | | | | fill prices. |
| will I be opening? | | | | 19. What extras are you looking for? |
| The type of account you want to open is important | | | | There are a number of extra services that stock |
| as some brokers will not handle registered plans. | | | | brokers offer. These may include: real time stock |
| 8. Will I be selling options against my stocks? | | | | charts, stock market screeners, research reports, |
| If you want to do simple options strategies like | | | | option calculators, newsletters and the like. These |
| covered calls make sure your account is set up for | | | | extra services may make the difference between |
| this. | | | | your final selections. |
| 9. What is the minimum return I need to break even? | | | | By asking yourself these questions before you |
| If you complete one trade a week and pay $10 to | | | | approach a stock broker you will have a much better |
| buy and $10 to sell then after one year you will | | | | understanding of what you need from them and be |
| spend $1,040 on commissions or 10.4% of a $10,000 | | | | better able to identify if the broker you are looking |
| account. By viewing commissions in this fashion you | | | | at will help or hinder your trading. |