The choice of a stock broker is a personal one. For somebody the ideal stockbroker might not be right for someone else. Since brokers are an integral element to your trading success its important to pick the best one for your needs. So where do you start? Begin by identifying what your requirements are. The following are some criteria you should keep in mind whether you are picking a personal broker or an online one:

Commission

We are not suggesting that you should base your decision entirely on commission i.e. Eliminating brokers with highest commissions and falling in love with lowest commission brokers is not the right thing to do. You should use commissions as a filter during your screening process. Example: For a broker whose commissions are $29.99 you will be paying for advice and other overhead which you might not even use unless you are just starting out. These commissions add up fast. It all adds up. So, if you are a newbie investor and think you would like extra guidance often then go ahead and pay those extra commissions. For those who aren’t new to trading and have dealt with stocks before you will need less personal attention. Then you should be looking for lower commissions and the remaining criteria for screening.

Minimum Account balance

Some brokerage firms ask that you maintain a minimum balance before you can trade with them. With the advent of online brokerages the overhead of owning a brokerage has reduced significantly and the competition has increased significantly. That is why brokers have lower balance requirements. We would recommend that you only invest money left over after you have 6 months of expenses kept aside in a savings account. Stocks are considered a ‘liquid’ asset i.e. they can be sold quickly but if you are forced to sell at a time when the timing isn’t right you could incur unwanted losses. Thats why we advise keeping aside a rainy day fund in CDs or a savings account.

Miscellaneous fees

There are always going to be hidden fees with personal or online brokers. Its important to ask for all the documents upfront and go through all the fine print available. It might not be the most interesting thing to do. But, its a very necessary evil. We would recommend looking up ‘broker name hidden fees’ in a search engine to get quick results too. Since nobody likes hidden fees they like everyone to know about it. The ‘inactivity’ fee is an example of miscellaneous fees. This is one of the rare occasions where the phrase is just as simple as it sounds. If you aren’t ‘active’ enough you might have to pay a fee either directly or through increased commissions. Read the fine print twice!

To avoid costly mistakes and pick the right broker visit –> http://www.brokerpennystock.com/.
Also read our online stock broker comparison.

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