How to Pick an Online Broker
Choosing an online broker can be a difficult process.
There are dozens of companies to choose from, each with its own commission rates, software programs, mobile applications, etc.
So how can you tune out all the garbage and make a decision? Just ask yourself the following three questions: 1) What Are My Dealbreakers? What are the features you can't live without? Do you want a firm with a branch network? Do you trade foreign stocks? These are the types of things that should dictate your decision.
In other words, what are your dealbreakers? Once you identify them, you'll narrow down a list of candidates pretty quickly.
2) What am I willing to pay? This is a tricky question because there is more to cost than trading commissions.
Receiving checks and statements by mail, executing wire transfers, and a million other things all have different costs depending on your broker.
So think about the services you currently use, and what you think you'll use in the future.
But if you are a heavy trader, you absolutely must look at firms that offer low-cost trading options.
The cost difference between using firm A and firm B can be enormous when you multiply it by hundreds or even thousands of trades per year.
3) Do I need a lot of handholding? This is a tough question because it is difficult to evaluate a firm's customer service accumen.
If you're a DIY-type who likes to teach and solve problems by yourself, then customer care may not be high on your priority list.
But if customer service is a major priority for you (it is for me), you should ask friends about their experiences with their brokers.
One of the reasons I went with Thinkorswim was its customer service reputation.
Other firms offer cheaper commissions, but I'll gladly pay up to have my problems solved efficiently, the first time.
There are dozens of companies to choose from, each with its own commission rates, software programs, mobile applications, etc.
So how can you tune out all the garbage and make a decision? Just ask yourself the following three questions: 1) What Are My Dealbreakers? What are the features you can't live without? Do you want a firm with a branch network? Do you trade foreign stocks? These are the types of things that should dictate your decision.
In other words, what are your dealbreakers? Once you identify them, you'll narrow down a list of candidates pretty quickly.
2) What am I willing to pay? This is a tricky question because there is more to cost than trading commissions.
Receiving checks and statements by mail, executing wire transfers, and a million other things all have different costs depending on your broker.
So think about the services you currently use, and what you think you'll use in the future.
But if you are a heavy trader, you absolutely must look at firms that offer low-cost trading options.
The cost difference between using firm A and firm B can be enormous when you multiply it by hundreds or even thousands of trades per year.
3) Do I need a lot of handholding? This is a tough question because it is difficult to evaluate a firm's customer service accumen.
If you're a DIY-type who likes to teach and solve problems by yourself, then customer care may not be high on your priority list.
But if customer service is a major priority for you (it is for me), you should ask friends about their experiences with their brokers.
One of the reasons I went with Thinkorswim was its customer service reputation.
Other firms offer cheaper commissions, but I'll gladly pay up to have my problems solved efficiently, the first time.
