Choosing a Broker that's Right for You!

Hi, Welcome to my Online Trading Blog. I created this blog for anyone who are nervous about the stock market as I was, now I am not because my hubby is teaching me about the stock market. And now we created an investment club (we meaning my family) more about that later. Here is a few tips on choosing the right broker.

Depending on the type of investing that you plan to do, you need to hire a broker to handle your investments for you. Brokers work for brokerage houses and have the ability to buy and sell stock on the stock exchange. You may wonder if you really need a broker. The answer is Yes. If you intend to buy or sell stocks on the stock exchange, you must have a broker.

Stockbrokers are required to pass two different tests in order to obtain their license. These tests are very difficult, and most brokers have a background in business or finance, with a Bachelors or Masters Degree.

It is very important to understand the difference between broker and a stock market analyst. An Analyst literally analyzes the stock market, and predicts what it will or will not do, or how specific stocks will perform. A stock broker is only there to follow your instructions to either buy or sell stock....not to analyze stocks.

Brokers earn their money from commission on sales in most cases. When you instruct your broker to buy or sell a stock, they earn a set percentage of transaction. Many brokers chage a flat 'per transaction' fee. See this company.

There are two types of brokers: Full Service Brokers and Discount Brokers. Full Service Brokers can usually offer more types of investments, may provide you with investment advice, and is usually paid in commissions.

Discount Brokers:
Accutrade-online trading of stocks, options, mutual funds & bonds
Scottrade-Discount stock brokerage
TDWaterhouse-online trading, mutual funds, option & bonds.

Full Service Brokers:
UniTrust Financial Services-financial services, investments brokerage, insurance & retirement planning
Edward Jones-offers individalized service with risk level based on each person needs and goals. Serves US, Canada & UK. (This is to give an idea the difference between a discount and full service brokers)

Discount Brokers typically do not offer any advice and do no research-they just do as you ask them to do, without the bells and whistles. So, the biggest decision you must make when it come to brokers is whether you want a full service broker or a discount broker.

If you are new to investing, you may need to go with a full service broker to ensure that you are making wise investments. They can offer you the skill that you lack at this point. However, if you are already knowledgeable about the stock market, all you really need is a discount broker to make your trades for you.

Stay tune for more......Happy investing

PS: I invite you to leave your comment, let me know what you think.

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