6 Steps To Choosing A Stock Broker

filed in Articles on Dec.07, 2008

Full Service or Discount Broker
The first step in choosing your stock broker is to choose whether you need a full service broker or not. A full service broker can provide many additional features as opposed to a discount broker, but you will also pay for it. You will need to determine whether or not you will need help in making your investment decisions. For some investors, this is exactly what they want because they don’t want to make their own decisions. For others, they can’t imagine leaving someone else in charge of their hard earned money. This is where discount stock brokers come into play. They offer the same abilities to buy and sell securities, but without the stock broker. With the internet readily available at our fingertips, market information and research is free at many websites. Investors can make their own decisions and save money with discount brokers.
Trade Commissions
The next big determining factor is price of trade commissions. This is usually the first thing that draws people to one broker over another. By general rule, the less you pay for trade fees, the more money you will be able to invest and keep when it is time to sell. Zecco Trading is the only stock broker that offers free trade commissions. This can really help an investor with limited capital. Other brokerage firms will charge anywhere from $4.95 to $19.95 for each trade.
Account Minimums
Some brokers require you to meet their account minimum when opening a new account. There are also brokers without any account minimums.
Inactivity Fees
Inactivity fees will be charged by certain brokers when there is no activity in the account. If you do not buy or sell often then it would be wise to check this.
Option Capabilities
If you are an options trader or would like to be in the future, then you will need to choose a broker that offers options.
Research Tools
Market research tools are provided for free with certain brokers and others will charge a premium subscription fee. With the availability of market data freely available on the internet, this may not be necessary for certain investors. On the other hand, some investors like the convenience of research and investment decisions all in one place. In the end, it will come down to your individual preferences and available capital when making your decision. With a good stock broker, some market knowledge, and a little bit of luck, you too can be another successful investor on your path to financial freedom.