How to choose the right stock broker
Over the last decade, technology has shaped stock trading in ways not thought possible. Trading volumes have increased, anybody with a computer and internet connection can access the markets, and cost of trading has reduced.
However, the most important aspect of technology’s influx in stock trading was the birth of discount brokers—online brokers who offer high-speed trading platforms at low brokerage price. This was a surprise to the traditional brokers called full-service brokers who had operated at the markets for as long as one could remember.
This new old competition has not just heated up the brokerage industry but offered the average trader a choice, a difficult one. Today, we try and help you choose one.
Which trader are you?
A young novice trader is like a new kid at the office. He or she needs someone to help them wade their way through office rules and politics. This someone is a full-service broker. Apart from investment advice, they offer advisory services such as retirement planning, tax planning, portfolio management. But, their charges can sometimes discourage traders.
A seasoned trader is like that employee who knows the ins and out of their company. Such traders can benefit from discount brokers. On offer is high-speed trading portals and an efficient customer care unit. And their charges are nominal. A novice trader may struggle here unless they are adept at the art of trading.
Can you handle technology?
Every passing day a new technology or feature emerges. The same goes for brokers. To gain and retain customers, discount brokers offer new and innovative features on a frequent basis. From an interactive ticker on the website platform to the ability to display charts on the smartphone app, nothing is impossible. While these features are indeed helpful, for someone who is not comfortable with technology, they may struggle.
What to do?
In the end, all you can do is sit down and evaluate your knowledge skills. If you can understand minute workings of the market and can take decisions on an independent basis, go with discount brokers.
If you are new to the markets or need a reassuring second opinion even after years of trading, go with full-service brokers but make sure you can afford their fees.
