I know many of us don’t like brokers, they act as a middleman and charge for every transaction. But you cannot escape from them if you wish to start trading.
So does broker really matters so much for a trader?
The answer is definitely YES.
Here you will feel the importance of broker and without them how things will become miserable. I in person thank the brokers here, as without them the whole system may have collapsed.
Then the question arises… who is the best broker for me?
I guess you will find the same difficulty as I faced while searching for a genuine, reliable and reasonable stock broker. Here I will share with you some interesting ways, as a beginner what all thing you need to look in your stock broker.
Let’s have an overview of what actually a stock broker signifies.
Typically, a stockbroker act as licensed representatives for an individual trader or for corporates in the stock exchange. They push our request in stock exchange through their brokerage firm network and help our transactions get settled. Not only equity but they can help us to purchase and sell any financial assets.
They are responsible for all types of paperwork and all that they want is brokerage fee for each transaction they make for you.
This fee depends on what type of account you have with your broker.
In a discretionary account, the stockbroker buys stock for a client based on some guidelines. In an advisory account, the stockbroker solely advises a consumer on what stock to buy.In an execution account, the stockbroker solely buys the stock that the consumer has specifically indicated, as the service change the brokerage fees changes with it.
They call themselves as a stockbroker or a Discount broker.
When you will look for a stock broker I can guarantee you that you will get confused with the wide range of services present day brokers provide.
I guess all of us have the capability to inspect things before we buy. Take an example of day to day life when we buy vegetables or groceries. Don’t we check its condition whether it is fresh or is expired?
Why not for stock brokers then..?
The problem here what beginners face is how to judge a stock broker.
This was the case with me too…
Got too many questions…? Wait I know you feel the same that is why I present you
9 best possible measures that will let you access most suitable online brokers
1) Broker’s Background:
First and foremost requirement is that whether your broker is worth of the job that he is doing? You will find many brokers who are not updated in their niche and struggle in providing updates to their customers.
You need to know whether your broker has sufficient expertise in his field or not. This usually happens with new brokerage firms with young brokers having less experience. Ask sufficient questions to check his knowledge and step ahead only when they sound reliable for your work.
This is the only way of income for a broker. They settle your transactions and charge a fee for your transactions. What you need to look is their fee structure. Is there any hidden charges or everything is fair and transparent? Also, you need to judge what type of investor you are and is the fee structure feasible for you.
By saying the type of investor I mean that whether you are a regular trader with a frequent transaction or seasonal trader with few transactions and hold the stocks for a long time
This might sound not so important but when you enter the world of trading you will realize that at any point of time you may need to access your Demat account and check your portfolio or schedule any transaction, and the problem arises when you realize that you cannot be in front of your computer all the time. So here brokerage firms play a role by providing an option for trading via smartphones or low technology device or even with phone calls.
4)Feasibility and friendly interface:
This is yet another reason why some brokerage firms do not become the best option. If the online system remains cumbersome and you need to follow up many steps to perform your task, it ultimately kills your time. And when it comes to trading all that matters is time. The interface should be quick, responsive easy to use.
5)Easy and fast access:
This measure relates to the above-described point. Consider a situation where the market is falling and you need to sell your stocks as soon as possible. You open your account and what you find is your account is not loading and the website is not responding.Gone, your hard earned money. Again time is what matters. Be aware to check the site and its reliability.
6)Other trading facilities:
There are many financial assets other than equities like govt bonds, commodities, mutual funds etc. which along with equities brokers can help you in buying and selling. Again they charge for the same and have a different fee structure for a different financial asset. You need to know whether you require such facility from your brokerage firm and avoid paying unwanted facility charges. If you want to deal with other assets also then your broker should acknowledge these facilities, if not then it’s not the best fit, for you.
Some brokers provide free research report online, some may provide on demand. This assists you to analyze your portfolio and help you decide your action plan to keep a profitable portfolio. You need to check if such facilities are available with your broker and are there some charges for that.
This is yet another important factor that governs the selection of broker. Try to ask any relevant or irrelevant question to customer service of your broker and check what is the response time. How quickly they can resolve your issues. This need to be taken care of as at any point of time you may need customer service for the proper working of your account, and if not fixed in time, it may push you in serious trouble.
9)What other people say:
Rating and reviews are what can help you judge your broker. We all do this usually for online products. Don’t you..? then why not for an online broker. See what others say. Get a review from their existing customers and ask them for suggestions.
What I will say is that price is not every time that matters. Searching for a broker with minimal brokerage charges but offers very bad services is not worth for trading. You need to keep a balance for all your measures.
All you need is a hassle free trading from any part of the world, with proper response in case of any urgency.
Do all your ground work before selecting your broker, after all this will be your first step you will take before entering the world of traders and remember best decisions make best fortunes.
This reminds me of a quote
“May your choices reflect your Hopes, not your Fears”