Stock trading has now become easier thanks to the internet. But with it comes the tough decision of choosing the right online broker to trade. It is crucial that you choose the right broker for yourself right before you start trading. Read on to find out more about how to choose your online broker.
One of the most crucial decisions that you will have to take as an investor is choosing your stockbroker. This should be of utmost importance when you are an enthusiast, starting off as a novice trader in the stock market. Even before you open a demat account online, you need to choose the right online broker will be your key to long-term success in the stock market. Just like an online demat account, with the advancement of technology, you also get access to many online brokers. But, with so many choices, it is hard to come to a decision.
So, how to pick the right online broker? Here are 5 tips to follow while choosing an online broker
1. Conduct your Own Research:
Our first tip will be to conduct a thorough research of your shortlisted online brokers. The broker’s background really does matter. You will be able to read reviews and what users have to say about certain brokers online. You will have to find out everything there is to know about your broker because they will be executing your trades and managing your portfolio. Not only that but a good working relationship with your broker will go a long way in the stock market. No one wants a broker with poor customer service or the inability to execute your trade requests on time. Reviews and testimonials on the internet will reveal what kind of a broker they actually are. Once you have made sure that a broker checks out, only then should you proceed further.
2. Discounts and Low Prices aren’t everything:
When you are starting out as a novice investor, you should opt for a full-service broker. A full-service broker will assist you in every way possible and advise you on what to buy and sell on the stock market. As a beginner it is better to seek guidance from such brokers to build your confidence. Once you know your way in the stock market, you can invest your money yourself. Just because discount brokers offer low commission rates, you should not opt for it at first. Discount brokers will not assist you in any way apart from just executing your trades. Not only that, if you are going for a discount broker you should call and try to find out if the advertised rates are applicable for all types of trades or not.
3. Availability is Important:
When you are choosing an online broker, visit their website during different hours of the day to see if their website is in working order or not. Visit the website during peak trading hours to check if the website functions properly at that point of time when it is handling the most traffic. Even though it is seldom that technical difficulties happen, but it is good to know what kind of alternative trading options your broker has. In case of a technical issue with the website or if you cannot access a device with internet, you can place trades using alternative methods like telephone trade. Make sure you know the rates for using these trading methods as they will surely differ from the usual rate for placing online trades.
4. Choose Your Investments Carefully:
Keep this in mind that in the stock market you can invest in a lot of “investment vehicles” apart from stocks. Stocks are just one product that you get access to. But your brokerage should be able to give you access to more alternatives like bonds, futures trading, options trading, commodities etc. Before choosing a broker, try to find out what other alternatives you have in terms of investments.
5. Extras, Extras, Extras.
Always be on the lookout for the online broker that will be giving out goodies to their customers. However do not follow free gifts blindly, they do not necessarily imply that it will be the right broker for you.
You will have to choose the broker that suits your needs the most. Depending on your requirement, you can choose one of your shortlisted brokers. Then you should proceed to open a demat account and start trading right away.