How do I choose a stock broker?

Stock broker firms vary by investor type.Some firms provide services to the "Average Joe" investor.Other firms tailor their services to the wealthy elite investor who makes multi-million dollar decisions on a regular basis.Whatever your type of investing is, you want to choose a stock broker who will be able to help you be successful.

1. The first step to choosing a stock broker is knowing how much money you want to (and are able to) invest.Some brokerage firms allow for transactions as low as $10.Other firms will not allow you to open an account with them unless you have a minimum first investment in the thousands of dollars.Obviously your budget is going to limit the type of service and assistance you receive.
2. After you have an idea of how much you can afford to invest in a given interval of time, you need to decide what kind of investments you are interested in.Brokerage firms usually have specialty markets.Foe example, if you are interested in agriculture, you would want to choose a brokerage firm that has a good understanding of that financial market.If your firm does not know very much about the markets you will be investing in, they will not be very helpful at all.
3. When you have narrowed down your list of possible stock brokers, the next thing you want to do is compare fees and services.One brokerage firm might charge $9 a trade with a discount broker while another might charge you $19 a trade.Watch out for hidden fees such as account service fees, handling fees, and electronic service fees.Also, keep in mind that not all brokerage firms offer the same services.Services such as investment advice with mutual funds, index funds, options, bonds, or certificates of deposit are not offered by every broker.Consider the downsides of using on-line brokers.On-line brokers are susceptible to computer breakdowns and errors which may in turn hinder any type of trading.Ask the firm you're considering if they have a way to solve this problem.Telephone transactions are a common solution.
4. Use good judgment when you are looking into your stock broker choices.Beware of brokers who offer services that are too good to be true.A broker who guarantees zero losses and high returns either doesn't know how the stock market works, or has something else up his sleeve.
5. Evaluate the advice that the brokers in a firm are giving.Ask around.Take the opportunity to learn from other investor's experiences.When you see a successful investor, consider asking her who her broker is.The best brokers will usually have a reputation as such.Use caution if you choose to go with a less well known stock broker. If you don't have a personal recommendation, read ads in financial publications.The "Wall Street Journal" is a good place to start.
6. Did you know that you can get a report on the legitimacy and performance of any stock broker?All you have to do is call the National Association of Securities Dealers at 1-800-289-9999 or visit their website at www.nasd.org.
7. Know the names of the big brokerage firms.Top firms for both full service and discount service brokers are listed below: Full-service Brokers - Merrill Lynch, Morgan Stanley Dean Witter, and Citigroup's Salomon Smith Barney. Discount Brokers - Charles Schwab and Fidelity.
8. Once you have made your decision and have chosen a stock broker, do not expect to be up and trading immediately. Keep in mind that it may take a couple of days to open an account.There is the application and set up fees that take time to process.