Latest posts by Emma (see all)
- Trading Tips: How To Choose The Best Online Stock Broker - April 3, 2019
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Online trading has grown in popularity over the past couple of years significantly, and it has now become one of the favorite ways of boosting personal income. If you want to enter the world of online trading, but you are pretty new to the game, it would be wise to find an online stock broker. Now, the good thing is that the competition between online brokers is fierce, which means that the prices of their services are coming down while the services themselves are being boosted.
However, choosing the best online broker for your needs, in particular, will depend on numerous factors, such as your budget, trading styles and personal goals. With that in mind, here are some things you need to pay attention to when choosing an online broker that will help you find the best fit.
Learn more about account minimums
First, when looking for an online stock broker, pay attention to account minimums. While some brokers require a minimum upfront investment (that can sometimes even go as high as $500) there are others that don’t require any account minimums. The account minimum is the amount of money required in order to set up a brokerage account. While some brokers will allow you to use these funds once you open the account, others will require for this sum to stay in the account at all times. Therefore, this should be the first thing you need to consider, which will make the pick much easier.
Learn about account fees
Account fees simply can not be avoided entirely, however, they certainly can be minimized. Most online brokers will charge you with a certain fee for either transferring funds or closing the account. But if you have decided to change your broker and that is the reason you want to transfer out funds and close your account, that new broker should offer to cover your account fees with the previous broker. Additionally, do know that there are even brokers that don’t charge for any account fees, so be on a lookout for them when opening a brokerage account.
Focus on commissions on your preferred investments
Online brokers usually offer a few investment options. Those include individual stocks, options, mutual funds, bonds, exchange-traded funds and currency trading. Depending on your preferred investment type, you should check out the commission. So, for instance, if you have already identified your preferred option strategy, the broker may charge you for the stock trade commission and the per-contract fee, or they can only charge you with either of the two.
Consider your needs
Now, depending on your trading style and the experience you have, your tech and other needs will significantly vary. Therefore, when choosing an online broker, you can either choose the one that fits your current needs, or you can opt for the one that will allow you to grow and change as a trader. Either way, you should definitely steer clear of the brokers that are trying to charge extra for any additional feature, because those costs can add up fairly quickly.
Use promotions to your advantage
As we already mentioned, the online broker market is pretty saturated, which means that the competition among them is fierce. Precisely because of this, numerous online brokers offer various deals, cash bonuses, commission-free trades, promotional offers and so on. So, when choosing, use this to your advantage and try to negotiate a deal that will work in your favor. However, be careful not to be too greedy and choose a broker solely on their promotional offer because they might have a high commission which can easily overrun any initial bonus, so keep that in mind as well.
Therefore, it’s important to understand that, when choosing an online broker, you need to keep all of their services, fees, commissions and offers in mind. Also, you need to identify your preferred trading style and know which type of investments you wish to partake in so that you know exactly which services you require from the online broker and what to look for. This matter should be approached with ease and it does require a lot of research beforehand, but it’s definitely not too complicated. And remember, if you are not happy with your current online broker, there are so many others out there waiting – you just need to take your pick.
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