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- The information listed below
is to be used as guide to help you select the
brokerage firm that is best for you. A table is
provided with various firms, their websites,
toll-free numbers, and online trading prices for
stock and options. Please use the website or
toll-free number to access all the information
possible for the brokerage firm of your choice.
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- Below is a list of important
criteria that must be considered when choosing a
discount brokerage firm:
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- Equity
Requirements: Most
brokerage firms require a minimum amount of equity
to open an account. This equity can be made up of
cash, securities, or any combination of these. The
amount of equity in your account can allow you to
get deeper discounts on trades and other services,
depending on the firm you choose.
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- Trading
Costs: The cost
of executing a trade is usually high on most
investors' priority lists. Prices can vary by a
large amount from one firm to another. Other
services offered by some firms can help to offset
the trading cost difference. It is wise to look at
the whole package a brokerage firm offers before
jumping aboard.
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- Product
Offered: The
types of trading discussed throughout this web
site involve stock, IPO’s, and options. These
products are offered by most but not all of the
firms listed in the table below. Some discount
brokerage firms offer a wide range of additional
products. These can range from mutual funds,
commodities and annuities to term life insurance
and precious metals.
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- Extra
Services Offered:
There are many extra
services offered by the different brokerage firms.
One firm may offer the various services free and
another may have a fee for the same service. If
you have a large account or process many trades the fees may be discounted further, but
this depends on the broker. Some of the most
popular extra services include: check writing or
debit card access to your account, touch tone
telephone trading, and the ability to talk to a
live rep should a question or concern arise.
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- Customer
Service: Customer
service response time and effectiveness of the
response can be a very hard thing to determine
while researching a broker. Getting help can be
very frustrating when you are trying to get
answers about your account or performance of your
web connection. Make sure the brokerage firm you
choose has both a customer service e-mail address
and service hot line to get answers to your
important questions or concerns.
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- Website Reliability: The
reliability of your online brokers website will
eventually cost you money in missed trades. A slow
web site or a site that is down can be extremely
frustrating when you are trying to get in on an
big upswing or out on a big slide. There are a few
ways your broker can help you through these hectic
times: a touch tone phone option to execute your trades
or a direct line to a live representative. It is
beneficial to find a brokerage firm that offers
this capacity and set up your account to access
these options.
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- You can also take a
few measures to protect yourself against website
slowdowns and downtime. Consider some of the
following options when setting up your account:
set up accounts with two brokerage
firms, open an account with a second Internet
service provider, and make sure your telephone
lines and computer hardware are up to the task of
running at maximum potential.
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- With the advent of
today’s advanced computer technology and high
speed Internet connections, today’s traders have
yet another choice to make when choosing a broker.
The question these days, is should I be trading
using a regular online broke or should I be
trading with a direct access broker. While for
most part-time traders an online broker is fine,
direct access to the markets is a must for the
individual trying to trade for a living. Listed
below are the differences between the two.
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- Online
Broker:
When trading through an online broker many people
falsely believe that they are placing their order
directly into the market but actually they are
not. When placing an order with this type of
account you are simply sending an e-mail to your
broker asking him to buy you the stock. This
order is then routed through their trading desk
and eventually executed. The problem with this
method of execution is that at times it can be
extremely slow. If you’re an investor or swing
trader holding positions overnight this style of
account is fine, but for the intraday trader it
simply won’t do.
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- Direct
Access Broker:
For the
day trader who’s quickly jumping in and out of
trades intraday, minutes can mean the difference
between a profit or a loss. In situations like
this a direct access broker is a must. When
trading through a direct access broker, you are
bypassing the middleman and routing your order
directly into the market. When you're routing your
own orders, it’s not uncommon to place an order,
have the trade executed, and receive your
confirmation all within seconds.
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- Besides the speed
advantages, a direct access broker will provide
you with other critical tools such as streaming
charts, a level II screen, streaming quotes,
streaming news, and a streaming account manager to
supervise your trades. These are all critical
tools for the intraday trader.
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