Online Stock Exchange

The brokerage industry has been transformed through discount online brokerages. Finding a stock broker online has never been easier; they abound by the tens seeking to attract investors hungry for the lowest commissions. The offer can sometimes be misleading, however, because the old adage “you get what you pay for” is taken literally. The lowest price can mean the lowest quality; therefore, the lowest price may not be the best thing for the investor, especially if they are inexperienced.

For new, inexperienced investors discount or do-it-yourself brokerages differ from the online stock exchange services offered by full-service brokers. That is why choosing a broker might be the most important decision an investor could make. There are several criteria to evaluate before making a definite decision for one broker, and new investors of any age need to be aware of these standards.

Trading stocks online can be a lot of fun for investors who have developed a trading strategy. Choosing the right broker, however, involves paying attention to the following standards.

1) Minimum opening balance

Some full-service brokerages offer checking accounts along with their brokerage accounts in order for investors to have easy access to their assets, since money can be transferred instantly from one account to another. However, the minimum opening balance of either account must be understood; sometimes a minimum balance is not minimal. For example, some firms require opening balances of $10,000 or even more. This might be fine for some investors, but for new ones they generally do not have this kind of capital.

2) Features offered

An investor is likely to have some amount of cash sitting in their brokerage account. Some brokers pay interest on this amount, which is essentially free money. Also, extra bonus features for opening an account can be pretty substantial at some brokers. For example, a few offer $100 in free trades for signing up with them. These and other features can be nice, but they must not be the only reason why the investor chooses them.

3) Available products

Most investors looking for a stock broker online are thinking purely of trading stocks on line. Brokers offer many other financial products, such as different types of bonds, certificates of deposit, futures contracts, options and even gold and silver certificates. This varies considerably depending on the broker, and obviously investors have different idiosyncratic needs, so finding a stock broker online needs to take the question of product availability into account.

4) Flexibility

Trading stocks on line is important, but what about when the investor is away from their computer? This is where over-the-phone trades come in handy. Does the online stock exchange offer this service? If so, what do they charge?

Conclusion

Full-service and discount brokerages offer services to their clients, but choosing a broker involves investigating each option using the criteria outlined above. Adhere to these standards, and the investor will not be disappointed.