Candlestick Trading Blog
April 21, 2009
Trading Broker
| Trading Broker Tips – How to Select a Broker One of the most important decisions you will make when you begin to trade stocks, or other securities, is selecting a brokerage firm that satisfies your needs. There are different terms and conditions that apply depending on the type of account that you choose to open. Minimum deposits can range anywhere from $500 to $2,500 so be sure that you have enough money to actually open a stock trading account before you begin filling out applications. There are four main types of accounts that you can open after you have selected a trading broker. These include cash accounts, IRA accounts, margin accounts, and options accounts. The cash account is very basic and is simply an account in which you deposit cash to buy stock, bonds, mutual funds, and the like. IRA accounts are simply individual retirement accounts and margin accounts allow investors to borrow money from your online broker against the cash and securities that reside in your account. (Margin trading is very risky and should only be practiced by seasoned traders). The last type of account is the options account. Only seasoned investors should open this type of account as well due to the high risk involved when trading options. When selecting a trading broker investors must pay careful attention to the commission and fees associated with a particular brokerage firm. The price is indicative of the service, so beware of extremely cheap brokers. You don't necessarily need to pay for the full service broker either who is the most expensive. It really depends on your needs and the amount of experience you have as a stock trader. Many online traders opt to utilize the services of discount brokers when trading in the stock market. It is also important to keep an eye out for hidden fees. Every trading broker will have hidden fees buried under layers of stock trading terminology and most of the fees are standard across the board, but you still need to be sure that you are aware of them. Some hidden fees to look out for include inactivity fees, account maintenance fees, interest on margin loans, fees for not maintaining a minimum balance, sales charges on certain securities, and fees for transferring assets into and out of your account(s). Again, while it is important to shop around, these fees are pretty standard in the internet stock trading world. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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