How to Select a Broker / Trading Company

If you would like to start investing you need to start researching the market to understand all the terms. You know you need to have a broker to represent your interests in the market, but how do you choose one? This article will provide you with some details about the different types of brokers that are available and tips on choosing the one best for you.

The first decision you have to make is how involved do you want to be in the process.How comfortable do you feel with doing research and making the trade decisions?Having the right broker can provide you with lots of valuable advice and be a valuable source for making money. A poor broker can provide frustration and cost you money.
There are basically two different types of brokers you can deal with. These are referred to as "Full Service" brokers and "Discount Brokers".

Full Service
These are the traditional way in which Americans have made their investments in the market.These companies provide a wide array of services for their investors. These brokers usually try to get to know the clients specific financial goals and develop a more personal relationship. The companies have access to teams of analysts that make recommendations.Your full service brokerage usually provides you with more personal contact. The fees that come with a full service brokerage are usually much higher than Discount Brokerage firms.

Here are some questions to ask about your full service brokerage?

• Do they buy and hold or do they trade frequently?


• Do they favor bonds or stocks?


• Do they like to buy and sell with large or small companies?


• Are the reports and recommendations easily readable and backed by legitimate sources?


• Have they been sued, fined or suspended?


• How attentive are they to your needs?Do they call back in a timely manner?

Discount Brokerage (Online)
These firms charge commissions far less than full service firms.These firms are not allowed to provide advice or information to investors about the investments they are making.That is one of the services that are not included in your fees.These firms are ideal for individuals who feel confident in their own investment techniques. Online firms provide a convenience and ease of access.

Regardless of which type of brokerage you select the best thing you can do is to ask around for referrals. Check with people you trust and ask them how their brokerage works for them.
Here are some additional tips for selecting your brokerage firm.
1. Make sure you know how much experience your consultant has. Check out the firm they work for.Is it relatively new? Have they had any legal problems?
2. Check out the fee and commission structure and amounts. Try to avoid multi-tiered commissions as they will eat away into your profit margins.
3. Make sure that your broker is licensed. Brokers are required to take tests and receive licenses to trade. Make sure they are licensed for your state as well.
4. Review the customer service options available. How much help will be provided?What types of research and analytic information will they provide? Is it understandable and easy to use?
5. Make sure you know the limitations of your account. Is there a limit to the number of trades you can make in a day, a week, a month? Is there a monetary value you have to reach?

The bottom line - do your homework. Just like you would with the investments plan to make, take the time to do the research for the company and person you want to work with.Make sure you find someone that matches your financial goals and needs.