How to Choose an OnLine Broker
Saturday, March 28, 2015, 5:00 AM | Leave Comment
An online broker is a broker who provides the services and interacts with its customer on the internet rather than face to face. As the manual interaction is nil or negligible therefore, the online brokers are cost effective. But it is said, bad broker is worse than the bad stocks.
There are dozens of companies offering brokerage services on the internet, and many of them are just as good as or better than traditional brokers. In the stock market timing is the key and thus the execution of trade at the best price is important.
Therefore, it is mandatory to check the following before signing up with any online broker:
As online brokers usually do not interact in person, therefore, it is required to check the website of the online broker for its content loading speed, especially during peak trading hours of the day.
If it refreshes the contents quick, then the chances of execution are instantaneously or with little lag. Check the various links on the website to ensure there is no technical difficulty.
Though we love to be net savvy, but there may be a possibility that we may not be always online, thus there must be some alternate ways to execute the transaction.
So, find out are they accepting alternate ways of orders like orders by fax, or telephonic order, and also the charges of such orders may vary from online services, which need to be clarified beforehand.
One must have the review of the broker in question from others (what they say). It is said, a satisfied customer recommends ten prospective customers.
Usually, nothing is free in this world, even if it is, then it is never respected. There may be fine print in the ad specifying which services the advertised rate will actually entitle you to.
In most cases, there will be higher fees for limit orders, options and those trades over the phone with your broker. You might find that the advertised commission rate may not apply to the type of trade you want to execute.
Services from a broker are attached with the price or an asterisk. The advertised transaction charges do not necessarily apply to all, therefore, one need to clarify this in detail.
Some reputed brokers might ask for high margin funding to start with, which may be fine with many but not with all. So, this need to be checked, how comfortable the broker is to transfer the fund out.
Primarily, it is taken into consideration that a broker meant for buying stocks. There are many financial products which are available to trade. Check if the same can be bought and sold through them.
There is nothing more exasperating than sitting on hold for 20 minutes waiting to get help. Before you open an account, call the company’s help desk with a fake question to test how long it takes to get a response.
You are likely to always have some cash in your brokerage account. Some brokerages will offer 3-5% interest on this money, while others won’t offer you a dime. Phone or email the brokerage to find out what it offers. In fact, this is a good question to ask while you’re testing its customer service.
Be on the lookout for extra goodies offered by brokerages to people thinking of opening an account. Don’t base your decision entirely on the $100 in free trades, but do keep this in mind.
After having satisfied on the above counts, it can be assumed that chances of misconduct in trade execution, fund transfer and other services can be minimal.
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