The long term investor will have different brokerage needs to the day trader. What really matters is whether you find the correct stock broker for your needs. So it may be worth asking yourself these four simple but important questions
- what kind of investments am I looking for?
- how frequently am I planning to trade?
- how much money do I have to invest?
- how much help or advice am I looking for?
Basically there are three types of brokers. Execution only brokers, Advisory brokers, but you make the final decisions, and Discretionary brokers who make all investment decisions with your specific budget and objectives in mind. Choosing a stock broker is not a decision to be taken lightly. Chemistry plays an important role. Choose someone you feel comfortable talking to, who is friendly, is trustworthy, professional, and willing to help and give advise on different trading strategies that you may be interested in considering.
You also need to determine the type of investor you are:
- the small investor
- the buy and hold investor
- the active trader
- the hand held investor
- the big wheel
Once you are clear on the type of investor you are, choosing the correct broker will be far easier. There is a certain criteria that will serve your trading and investment goals well so also consider:
- compare online brokers with full service brokerage firms
- determine and understand the services you require and your investment goals
- ask colleagues and friends for referrals
- meet with the prospective broker and inquire about
- how long they have been in business
- brokerage fees and policies
- how often they contact clients
- investment philosophy
- ask for referrals to clients with similar investment goals
You will find that most brokers offer a number of different services and can often tailor these services to meet your requirements.
Take care,
Stock Trading Mum
