It is a fact that a brokerage account is essential for starting any investment or trading. You can open such an account only with a broker. So, selecting the most knowledgeable and reliable broker is as vital as selecting the right commodity to invest. This vital task is not completely different from choosing a commodity or stock, as it needs muchmeticulous contemplation.
Perhaps, this is because not all brokers are suitable for all investors. Each investor has its own unique priorities based on which she or he selects an online or a brick-and-mortar broker. A few investors do not mind paying higher commissions, while others have a priority of lower overall cost. Here are some factors to consider and weigh as per your priorities for selecting the best broker.
Your Trading Style -> Full-Service or Discount Broker
Before you look for any brokers or online reviews, find out your trading style or how will you trade. You might choose the buy-and-hold strategy or move-with-the-market strategy to trade more frequently. Regardless of the chosen approach, do a thorough research on it, evaluate the current market state, and then pick a broker that can offer all services and tools for your strategy.
Here, you get two choices: Discount and full-service brokers. While discount is tempting, it is not always a great deal. It is more reliable to choose a full-service broker. Such brokers provide more services and have enough knowledge to guide the beginners.
They do much groundwork, offer timely advice, and give personalized recommendations. Thus, you can easily gain confidence for trading and knowledge of different markets.
However, a full-service broker charges handsomely. So, if paying brokerage fees is an issue, you can go for a discount broker.
Recognition/Endorsement -> The Key to Trustworthiness
It is essential to choose a licensed broker with good experience and loyal customer record. Having such a broker increases your probability of making profits. Well, licensing and loyal records only follow a certified/recognized broker.
Such brokers are usually the members of renowned institutions or agencies such as the Securities Investor Protection Corporation (SIPC) and Financial Industry Regulatory Authority (FINRA).
Pricing -> Quality Functioning
Selecting a broker just because its commission is the lowest one, is unwise. Remember, you get only what you pay for. This is how price indicates quality. If you choose an online service, an ad fine print states the services for which the advertised rate is applicable. So, do read it! Mostly, fees are high for limit orders and options.
Availability for Service -> The Key to Reliability
Ideally, a broker should be available to help whenever you need it. You can check out the work timings for that purpose. In case of an online broker, try visiting the site at different times, particularly during the peak hours of trading and see how fast is the loading speed. Further, test some links to ensure that there are no navigating issues. As a tip, check out this aspect in the specific reviews, such as trade.com review.
You can even call a company and ask for help to see how promptly it gives the response. At least, you will know the waiting time.
Extras -> Diversified Portfolio at Economic Rates
Choose a broker that offers extra freebies or goodies as well as different products such as bonds, options, gold, futures, and financial services. He will be an economical choice for you.