If you’ve just decided to start investing in stocks and trades, then one of the most important questions you will ever ask yourself is “How do I choose the ideal stock broker?” Finding yourself the right broker for your specific needs is crucial to long-term success when it comes to trading. Before we start talking about what your brokers can offer you, let’s take a look at who exactly a stock or share broker is.
A broker is a regulated and licensed financial institution that serves as your connection to the stock market. The broker you choose to partner with will have quite a significant impact on your day-to-day trading activities and earnings. When it comes to selecting a broker, you need to ensure that the entity you have chosen offers you the facilities and services you require to meet your personal and financial goals. Every broker has their own pros and cons, but let us look at few important factors that you need to consider before making a final decision.
Points to consider for finalising the ideal stock broker
- Brokerage Fee
For most people, the brokerage fee is the only criteria worth considering. This fee is the amount that your stock broker can charge you on a per trade basis. Of course, today the market is quite competitive. Not all brokers charge on a per trade basis. There are certain brokers who charge flat fee for certain number of transactions carried out over stipulated period of time. For example, Firm A might charge you Rs. 10 per trade you make. On the other hand, Firm B may charge you Rs. 200 for up to 50 transactions carried out over a period of 30 days. You should select a broker who offers you the most affordable brokerage fee. This will depend on the volume of trades you’re intending to make.
- Clearing Options
Are you’re looking to become a short seller? Then you’ll want to pay attention to the clearing or borrow options that a broker can offer you. For short stocks, you essentially borrow shares that will be returned at a later time. You are borrowing the shares from your selected broker in this equation. In such a case, you will need to partner with a broker who has access to the kind of stocks you’re looking to trade in.
- Trading Software
This is often overlooked as a factor to consider. In today’s digital age, everybody wants to be able to manage their accounts and investments even while they’re on the go. If this rings true for you, you should look for a broker who either has a free mobile app or an easy-to-access website where you can monitor your trades.
- Customer Service
It may seem frivolous to base your decision on the kind of customer service you get. But if you’re an intraday trader or somebody who deals with a large volume of stocks, you will want to partner with a broker who is always accessible. What if anything were to go awry? You should be able to count on your share broker to address the issue as quickly as possible.
When it comes to choosing a stock broker, one size doesn’t fit all. Every investor needs to consider a number of factors before deciding if a stock broker is able to meet their specific financial requirements. Remember, in the long run, you’ll want to partner with a reliable broker who is affordable and accessible.