7) Brokers and Online Trading: Conclusion

by · August 25, 2010

Part of the success you will have through investing is not through which stock, bond or mutual fund you buy, but rather with the broker you’ve chosen. Brokers are your direct line to the market. On your way to building a sound investment portfolio, brokers are behind your every step into accomplishing your investing goals.

Let’s review some key points on brokers:

  • Brokers are the people or business entities who handle customer orders in trading securities.
  • Brokers are salespersons too.
  • Choose a broker that suits you just as you choose an investing vehicle that is in line with your personality.
  • In opening accounts, brokerages may require you to deposit from a few hundred dollars up to thousands of dollars or nothing at all.
  • Depending on the type of brokerage, they will charge commissions through every trade you make.
  • Full-service brokers offer more services but at a higher cost.
  • Discount brokers are more affordable but don’t offer extras.
  • Watch out for hidden fees.
  • Online brokerages have changed the industry by lowering costs and blurring the distinction between discount and full-service brokers.
  • Always do a background check on brokers and firms you are not familiar with, before doing business with them.
  • The type of account you need depends on the type of securities you want to hold.
  • There are several ways to execute an equity order and you must communicate this to your broker.