| There are several factors that you should keep in | | | | the third parties for trade executions and other |
| mind before selecting a stockbroker for your online | | | | technologies like Laser that provides the highest level |
| stock trading. These factors include stock trading | | | | of functionality and speed in trade executions. |
| commission, fast trade execution, security of your | | | | In this way these broker firms can beat not only |
| personal and financial information, provision of trader | | | | their peers but even the large firms like Merrill Lynch |
| education and research tools such as graphs, ticker | | | | and Morgan Stanley in attracting customers because |
| symbols, news flashes on the website and so on. | | | | the later companies do not entertain smaller |
| Assuming that all other factors remain the same, the | | | | customers even though their trade commissions and |
| first and foremost consideration before you open a | | | | other service charges may also be low. |
| stock trading account should be the overall cost | | | | Another reason why they can afford to beat their |
| efficiency which can result primarily from low | | | | competitors may be that they purposely do not |
| brokerage or commissions. | | | | offer frills like investment advisories and other |
| A one time commission on a trade does not matter | | | | expensive manpower heavy services whose cost |
| much even if it is on a high side. But if you are a | | | | would naturally be transferred to customers. |
| regular trader and more so a day trader, a slight | | | | They employ technologies to automate the trading |
| difference in commissions may affect your income | | | | processes and avoid as much of human element as |
| substantially, be it on the higher or the lower side. | | | | possible. They reduce the costs through large |
| The total difference over a long term can increase or | | | | volumes and pass the savings on to their customers. |
| decrease your earnings by thousands of dollars. It is, | | | | Imagine the cost savings of a brokerage firm |
| therefore, very important for you to check the | | | | employing only 60 employees and doing as much |
| brokerage of the company which you choose as | | | | work through automation as another company that |
| your stock brokers. | | | | has 1600 employees! |
| Do not ever think that the broker who charges you | | | | Intensive shopping for a stock broker may initially |
| the low commission does not provide you a quality | | | | consume lot of time, effort and energy, but the |
| service. Quite possibly he does not charge you high | | | | savings in costs and commissions can be huge in the |
| commissions because he does not offer you | | | | long run. |
| needless frills. | | | | Why should you pay as high as $7.00 or more per |
| Take the example of Wal-Mart and Saks Fifth | | | | trade when you can find a broker who charges you |
| Avenue. While the quality of the merchandise offered | | | | a measly amount of $1.50 to $ 3.00 for the same |
| by both the retailing giants is usually the same, | | | | trade execution? |
| Wal-Mart charges the customers much less price than | | | | Why should you pay charges that are hidden from |
| Saks Fifth Avenue on the same item. The reason | | | | you when you open an account? Why should you |
| why Saks Fifth Avenue charges you more is because | | | | pay account inactivity charges or account |
| it provides a really nice customer service, but then | | | | maintenance fees when you can find a deep discount |
| you have to pay through your nose. | | | | broker who can afford not to charge you the same? |
| Take again the case of Wal-Mart and a small retailer | | | | So whether you are a small, a medium or large |
| close to your home. While Wal-Mart makes bulk | | | | trader, an active trader or a long-term investor, you |
| purchases directly from the manufacturers and | | | | can find an online broker who offers numerous high |
| suppliers, the small retailer has to purchase his | | | | technology tools and other trading services and |
| merchandize from the middlemen. Obviously Wal-Mart | | | | charges the lowest commissions among the online |
| can afford to charge less. | | | | brokers. |
| This applies to the brokerages too. Some brokerages | | | | It is, therefore, highly recommended that you should |
| can afford to ignore annual fees and other service | | | | do an intensive search on the Internet before settling |
| charges from their customers precisely because they | | | | for a stockbroker. You should never skip over a |
| source their services on institutional basis and transfer | | | | website of broker who is charging you very low |
| their savings to their customers. | | | | commission on the presumption that he may possibly |
| Or, they may be the retail arms of large institutional | | | | be a new entrant in the market and may not be able |
| companies themselves. So they do not have to pay | | | | to provide you high quality service. |