How to Select an Online Broker
All you really want to do is buy and sell financial instruments, right? So why worry about what online broker you choose, and why do you even need a broker? The truth is that only qualified brokers can make the actual trades that investors order. Brokers are an investor’s or day trader’s portal to the world of financial trading whether their interests lie in stock, bonds, commodities, forex or other vehicles.
Before the internet came into widespread use by consumers (which most readers likely don’t even recall) investors would pick up the phone and call a human being broker or send a signed fax to the office to initiate their trade order. That broker would execute the buy or sell order as quickly as possible assuming that he (or she) is in the office and the markets are open. With the logistics of buying and selling for multiple clients there could be delays in the transaction being completed.
Today with the technical capabilities facilitated by the internet and today’s modern trading systems traders can make the orders themselves through sites operated by online brokers. Brokers remain the focal point of the actual trading activity but the process is now streamlined and efficient.
Selection remains an important consideration as all online brokers are not alike, any more than human brokers were in the past. Read on for how online brokers vary and how to make the right choice for your financial well-being.
What are the Differences between Online Brokers?
Online brokers have grown in numbers which makes it all the more important that you connect with the broker who offers the features, services and cost structure that most facilitates your financial strategy. US News & World Report puts forth some basic considerations:
Cost structure – fees and commissions can vary greatly depending on the broker and the financial instruments you buy and sell. Some brokers will tack on fees that you may not consider up front such as inactivity charges for accounts that aren’t generating transactions. Individual transaction fees are typically low for online brokers but they still can have significantly different per-transaction fees. Commissions and discounts are also to be considered when evaluating your total costs.
Tools – online brokers in general have become quite technically advanced in providing basic tools and sophisticated analytical tools to clients. Be sure the broker you’re considering can support your research and information needs to allow you to make investment decisions. If you’re an experienced trader who conducts your own investing research without reliance on broker-provided tools you may consider costs over available research and analysis tools. On the other hand beginning traders or experienced investors who employ the tools provided by their online broker will find it worth even higher costs to have access to such valuable features.
Service and support – when you have questions or problems with a trade or your account you want prompt reliable service. When considering your choice for an online broker check out what options they have to assist you with any issues that may arise. Do they have online chat, phone service, or email requests for support? Are they available 24×7 (especially important if you tend to trade in after-hours markets)?
Weigh each of these topics against your own particular priorities when making your online broker selection.
Additional Considerations for Online Broker Selection
There are other important criteria that come into play before you decide on your online broker. Some will be directly dependent on the type of trading you intend to participate in. Investopedia also provides valuable insight for online broker evaluation. Day traders will place a strong emphasis on performance of trade execution due to their reliance on timing to be successful. Availability and support will be critical to day traders, as well.
Analysis tools – this category means much more than just a standard stock ticker that provides real-time stock information – which many online brokers provide. More technically advanced brokers also enhance their clients’ trade experience through availability of complex and sophisticated market analysis tools utilized by the most technically-savvy investors. It’s your individual investment strategy that will determine how important such features are for you. Some of these tools are as simple as charts that illustrate current market trends or history of a particular stock. Others contain specialized formulas to predict future activity.
Selecting the Online Broker that’s right for you
Remember that your online broker is the critical link in your online trading strategy. Broker reliability and services can make or break your investment profitability. Online brokers vary in additional aspects:
- Access to the broker’s services – are they available 24×7 or only when markets are officially open?
- Performance – how quickly will your orders be executed? This is particularly important to day traders who buy and sell over extremely short time periods of hours or minutes.
- Technology – many investors and especially day traders will need access to their accounts not only at home or in the office but anywhere. Mobile applications for online trading via smartphones or tablets are now essential to their investment activities.
- Support – does the online broker have support available when you need it or any at all? Support options also vary a great deal among broker services from 24×7 real person phone support to simple online FAQs designed for self-help.
Making that Final Decision for your Online Broker
Now you have a fair understanding of the features and capabilities that need to be considered when selecting your online broker. Weigh each factor against your particular investment strategy to determine what elements are the most important to you.
SureTrader is a leading online stock broker for day trading that provides clients with functionality and tools that enable traders to make intelligent and informed trade decisions. SureTrader features include sophisticated analysis tools with real-time stock tickers and support that is both courteous and available whenever day traders need it. SureTrader clients benefit from lightning-fast execution of trades even in after-hours trading that maximizes your investment options. Technology available to SureTrader clients includes desktop and mobile options using both iOS and Android devices. Contact us right away to get started with online trading that takes advantage of the best in online trading sites.
Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.