CHOOSING THE RIGHT BROKER

Broker — Who is it?

A broker is the deals mediator, handling your transactions when you are investing. This term describing the actual person you are dealing with or a company (brokerage house). Actual brokers work for brokerage houses and have the ability to buy and sell stock or other market tools.

There are two types of brokers:

A full service broker – the qualified person whove got the responsibility to provide you all the information about the investment and can control your total portfolios.

A discount broker – the person who only may carry out your orders for investments, but can not give you any recommendations or manage your account.

Here is one important thing – of course, a discount broker should cost you much less.

Depending on the type of investing that you plan to do, you may need to hire one of these kinds of brokers to handle your orders or investments.

Here you can ask yourself – do I really need a broker? and the answer is usually yes . but the type of brokerage service really depends on your financial education, your familiarity with the market and your experience in this field.

For new investor generally recommended to have a real person full service so he has an opportunity to connect with for any question. For now, most of on-line brokerage companies have outstanding customer service departments and provides the possibility to receive the personal service. If you are beginner and interested in a full service – just check for a local office of the company youd like to work with.

Experienced investors may need much less support and content with a discount broker for the specific market orders.

Can I trust my broker?

Usually yes. Modern requirements to brokers are very high – they have to pass different tests in order to obtain their license. Also, most brokers have a background in business or finance, with a Bachelors or Masters Degree.

But remember – the broker is just a man. Dont go after your brokers order like a sheep! As the existing world economic situation shows us – brokers tend to make mistakes.

Can a broker analyze the market for me?

Definitely not! There is a huge difference between a broker and a market analyst. An analyst literally analyzes market trends and charts, and trying to predict what going to happen, or when a specific trend will change (sometimes he is right, sometimes – wrong!). And a brokers task is only to follow your instructions to either buy or sell … not to analyze it!

How much does it cost?

Your broker earns his money on commissions on transactions (no matter how your portfolio doing! ). There can be also a lot of other fees – such as inactivity fees, transfer fees, account maintenance fees, interest charges (for purchases made on margin), etc. This is the good reason to read the fine print into an agreement really carefully before you sign in!