6 Tips On Choosing A The Best Stock Option Broker Possible

Posted by admin on 17/01/2013 in Stock Options Comments Off

The unstoppable emergence of the internet into the mainstream has turned the stock option trading and investment industry on its rather giant head.

Today, with such a plethora of online broker choices, we can happily weave in and out of stocks, bonds, options, funds and more with sublime ease and convenience. And our pockets are barely the lighter for the experience.

It was not always so, with broker transactions requiring a distinctly human touch before the internet just sort of turned up in all our lives. Let’s have a really quick history lesson. In the “olden days” you would need to call a broker to place a trade order, and often the norm was for the broker to provide advisory services. While it all sounds quite warm and fuzzy, the industry earned a reputation for being somewhat waspish with high broker fees and biased advice that bordered on the downright conspicuous.

There was a famous Woody Allen quote which summed up rather neatly the suspicion and cynicism with which old school stock brokers were once considered – “A Stockbroker Is Someone Who Invests Your Money Until It’s All Gone!”.

I’m happy to report, it’s quite a bit better now. Why? Simply, the smaller investor has gained power and control over every aspect of their investment activities. We enjoy more investment choice than ever before. We can tap into both domestic and foreign equities and investments. And, rather deliciously, we can do it all for a few bucks a time with a broker who is essentially an obedient robot and who wont try to flog us lousy stock. There’s no looking back.

However, as with many things in the world, the cheapest choice of online broker is so often not the best one. And doing your due diligence on a myriad of key broker features will just ensure that you pick a supportive online broker who lets you get on with the job of growing your wealth and is only about when you need a little help.

So, before you so much as type in the “O” on your search for “online broker” on Google, here are some must know tips on selecting the broker that’s right for you:

1. Bigger Brokers Tend To Be A Safer Choice. Before you retort with “Oh yea, what about Lehmans?” – the fact remains that the longer a broker has been around, the more safe your money is likely to be. Look out for a good, industry leading brand name which has a good reputation.

2. Excellent Support. Don’t compromise on this part. There are numerous things that could, potentially, mess up when you trade online. Systems glitches, account issues, price slippage and more. Good, timely support is important should you face issues, and not all online brokers provide the same value in terms of support.

3. Sniff Out Frequent Trading Deals. If you intend on trading a large volume, consider tapping into frequent trader deals that some online brokers offer. Your commission charges can become rather expensive if you trade in volume, so getting the best possible broker deal is paramount. Or it will eat into your trading profits.

4. Access To Good Online Tools & Research. The proliferation of online brokers, all vying for your business has delivered more than just cost savings to the investor. Now days you can expect an impressive range of investor trading tools, learning tutorials and more all for free. Once upon a time, you would have had to fork out a pretty penny to access such expansive and sophisticated trading tools and information.

5. Search Stock trading and Investment Forums. These are often awash with broker tips, and you can usually find the latest broker deals for new sign ups.

6. What Level Of Service? While we’ve focused on the mainstream “execution only” online brokers there are other tiers of brokers who provide additional support and services. For example, you could opt for a “Full Service Broker” who provides stock recommendations and can help advise you on your whole portfolio. This may suit those investors who aren’t particularly inclined or experienced to invest their own wealth.

If you ask most experienced investors who remember the BAD old days, they’ll probably tell you – as far as picking brokers and the sheer ease and abundance of investment opportunity is concerned, us lot have never ever had it quite so good. Or cheap.