Posted by forex at 4:26 AM
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1. Examine all fee information very carefully when comparing discount brokers. Low fees for trades can be offset by account maintenance fees, withdrawal fees, minimum balance requirements, additional fees for trading other types of securities (such as options, futures and foreign exchange) and additional fees for making large trades. Some brokerage firms even charge hidden fees for features like stop-loss orders, which can greatly add to your expenses.
2. Determine how the online brokerage's fee structure will interact with your trading style. If you make frequent trades on a daily basis, a brokerage firm that offers a discount package for high volumes may be a better choice for you. Conversely, if you make few trades, a brokerage account with high trading fees but possibly better research tools and other amenities may be best.
3. Use any trial program offered by the brokerage to get a better feel for the user interface. Traders with little computer experience may be better served by a brokerage firm that has a colorful, easy-to-use graphical user interface with ample documentation. More sophisticated traders, possibly with some computer programming background, may prefer using a brokerage firm that offers a highly customizable user interface.
4. Take a close look at what the fee structure is like for trading non-stock instruments like options, futures and foreign exchange if you are interested in dealing in those on a regular basis. There are also discount brokerages that specialize in those securities.
5. Check with the Better Business Bureau and Securities and Exchange Commission (SEC) to ensure that the brokerage is a legitimate operation. If you send your money to a scam brokerage that steals your funds, you may never recover it. The Financial Industry Regulatory Authority (FINRA) also maintains a database of brokerages and documents any wrongdoing they may be implicated in. If you are trading futures or foreign exchange, you should check a firm's registration with the National Futures Association (NFA).
6. Examine any social networking features the brokerage might have. Some discount brokerages give you special access to forums, chat rooms, profile exchanges and other social network features for traders to exchange tips, trading stories and business ideas.
7. Learn more about the customer service options offered by the discount brokerage. Find out if they offer customer support 24 hours a day if that is important to you. Look up reviews of the brokerage online that might tell you more about how responsive, polite and effective its customer service staff might be.