Choosing the right brokerage to help you in trading is no easy task. Several factors need to be considered before you sign on the dotted line. Many online discount stock brokers may offer packages that seem attractive upfront, but you need to delve deeper to scrounge for hidden facts and the like. Listed below are seven of the most important factors that you must consider before choosing an online broker.
Factor 1 – Fees
A brokerage that is too expensive and whose pricing policies are unfriendly to your trade volumes will eat up all your trade profits. Therefore, you must look for brokerages whose pricing policies most suit your trading goals. You must also look for any hidden costs involved.
Factor 2 – Customer Service and Support
A company with a poor and unresponsive customer service can make life difficult for you. Many a times, you will have questions about the trading platform that you are using or about the market in general. Poor support from the brokerage will hinder the development of your trade plans.
Besides, a company with poor customer service will also probably be unconcerned about any reviews or feedback that you provide them about their platform.
While choosing a broker, make sure that they are approachable 24/7. A local branch office will go a long way in increasing the accessibility of the brokerage firm. Local branch offices also translate into a more responsive customer service.
Factor 3 – Trading Platform Technology
A trader has far more chances of succeeding in his trade strategies if he/she has access to superior tools. Several brokers provide only basic tools to the trader with the assumption that the trader is already well equipped. Watch out for such brokerages.
Most of the top tier brokerages offer you with analytical, portfolio assessment and other such common tools besides providing tools that may be unique to that brokerage alone.
Factor 4 – Research Tools and Amenities
Make sure that the brokerage provides you with analysis and assessment tools so that you can assess information that will help you make good trade decisions. Also, check out the source of the information that the brokerages provide you with. Some brokerages also provide you with 3rd party information to remove any iota of doubt regarding the quality of the information.
Factor 5 – Education
A trader needs to constantly keep on learning about the market in order to make better decisions. Besides, a trader will also need schooling in learning all the features of the trading platform on the offer. A good education program can help to quicken this process. This factor is of special importance to novice traders.
Factor 6 – Website Reliability and Speed
Make sure that the website of the brokerage is user-friendly and is constantly updated. If the trading is done through a web portal, then the speed of trade execution needs to be fast. A fast trade execution has many advantages for you as a trader. The values in the trade market are constantly changing. The more time it takes for a trade to be executed the more is the loss you may take.
Factor 7 – Brokerage Reviews
Refer to annual brokerage surveys such as the Barron’s annual review. Reviewing such surveys will give you ample information about the top brokerages in the business. The Barron’s review also ranks the brokerages on the basis of their individual strengths in some core areas. Reading these reviews will help you to shortlist the brokerages you want to consider.
Here’s a helpful comparison chart.