The online stock broker that you choose plays an important part to your success as an investor or trader. This is true regardless of whether you are just starting out or have years of experience. Different brokers have different strengths, so you may find that you need to make a change as you gain trading experience and develop your own set of requirements.
Beginning traders should choose their broker from the category called discount brokers. Within this category you can find big, prestigious brokers who offer a quality service with lower commissions than the traditional New York investment firms. To evaluate which is going to be the best online stock broker for you, you should focus on cost and their quality ratings.
Cost is hugely important, especially for the beginner. A novice can expect to make mistakes early on and will tend to place smaller trades and more frequent trades as they figure out what works for them. Given this, the commissions you pay will cost you more on a percentage basis than if you are making fewer, larger trades. And those commissions can often make the difference between a profitable trade and a loser.
The quality of the discount brokers is measured by such reputable names as Barrons magazine, Business Week, SmartMoney magazine of the Wall Street Journal, among others. They rate brokers across a variety of factors including quality of customer service, breath of investment offerings, variety and sophistication of trading tools and research.
So the question is, can you find a quality discount broker who also charges low fees? The answer is a definite yes. To find them, it is best to compare these brokers side-by-side so that you can get a good feel for the strengths and weaknesses of each. You can also determine the right choice for you based on your needs and your trading style. If high-quality customer service is important to you, then you will know which discount brokers to add to your short list.
To view a comparison chart of the best discount online brokers, visit Discount Broker Comparison Chart
Daniel B. Johnson is vice-president of a wireless communications company based in Dallas. He maintains a successful online trading career on a part-time basis to earn an additional income stream.