If you have ever looked online for a broker, you will have no doubt come across many different brokers all claiming to be the best broker for your hard earned money. Some of these brokers are good, others are complete crooks. In this article I aim to help you find a stock broker that is right for you.
Find A Stock Broker Based On The Types Of Stocks You Will Be Trading
Firstly, it’s important to establish which type of stocks you plan on trading. Some brokers are much better suited to certain types of trading than others.
For example if you want to trade penny stocks (Stocks priced less than $5), you will need a broker that doesn’t charge extra for trading these kind of stocks. Many brokers have hidden charges for these stocks. If you want to trade penny stocks, be sure to checkout my Penny stock brokers page.
If you do not require any advice on choosing your stocks and would just like to trade the stock market as cheaply as possible, a discount broker is likely to be your best option. There are a few discount brokers out there that charge less than $5 per trade without any hidden charges. These brokers are OptionsHouse, Zecco and TradeKing. To see more cheap brokers, feel free to checkout my discount stock brokers page.
Find a Stock Broker Based On How You Trade
Another important consideration when you are looking for a broker is if you would like to make trades over the phone rather than online. These are often called “Broker Assisted Trades”. Some brokers charge a huge premium for this. I’ve seen some brokers charge a staggering five times more for a trade made over the phone instead of online. Optionshouse and Tradeking offer the cheapest broker-assisted trades.
If you feel you need assistance with your stock trading, investing in mutual funds may be a more suitable option for you. You could also read some of the training articles on this site and do some virtual trading for a few months to help you get a feel for stock trading. If you do want to learn to be a successful trader, take your time, there is no rush and please do not give your hard earned money away to greedy brokers and their salesmen in their flashy suits.
Perhaps you feel you need some help choosing your stocks? There are many brokers out there who are more than happy to assist you with your stock picks. These brokers are often referred to as Full Service Stock Brokers. These brokers often offer assistance with many other matters relating to money including tax advice, retirement planning, risk profiling and much more.
Watch Out For Con-Men
Unfortunately, I cannot make any personal recommendations about these. This is because in my view most full service brokers are nothing short of con men.
It is not uncommon for stock trades to cost well in excess of $150 when using one of these brokers.
Yes, they may offer you advice on which stocks to pick, but you need to ask yourself a question. Would they really be doing the job they are doing if they could make it big on the stock market themselves? In most cases the assistance they give you isn’t worth a fraction of what you pay them.
Additionally, even if your investment does perform reasonably well, and that is a big if, all of your profit is likely to end up in the greedy pocket of the broker.