Stock Trading Account
What Do You Need to Know Before Opening an Online Stock Trading Account
Couple weeks back, I wrote about stock investing tips and one of my final tips discussed using an online stock brokerage account once you get familiar with stock trading and have some experience behind you. To continue that topic, it would be helpful to know what features to look for in an Online Broker, as there are many options out there.
Whether you are a novice or seasoned veteran to online stock trading, here are some important features and points to keep in mind when you open an online stock trading account.
What trading tools do you need to conduct your research? Company historicals, independent market research, real time quotes, SEC reports, etc. Check to see what trading tools are provided by the broker, both free and premium tools, which may cost you.
What types of online trading are you planning to do, stocks, mutual funds, bonds, ETFs, retirement accounts, IRAs, etc.? Are these investments offered by the broker? What are the respective fees for each of these investments?
Are you a day trader or a buy and hold trader? In other words, how often do you expect to be buying and selling. If you trade often, then a low commission or trade fee is important. Otherwise, getting good customer service may be more important than a low fee trade.
How is the commission structured? Is it based on the size of the trade, size of the order, or a minimum balance in your account. Make sure to read the broker’s policy about commissions and fees on their website.
Most brokers will require a minimum amount to open an account. The low commission may also be limited to maintaining a minimum amount in your account. Check to make sure these amounts are within your financial limits.
Ensure there is no inactivity fees. If you buy and hold or trade occasionally, then this is important for you to know. Again, read the company’s website for details.
In some cases, especially if you trade more frequently, you may have cash sitting in your account. Compare the interest rate provided for cash residing in your account with the online brokers you are considering.
Read and review independent third party reports to see recent news, articles, and other evaluations by consumer research groups on the company to see if there is any information on the company that might concern you.
These days, online privacy and online security is of the up most importance. Read the company’s privacy policy, security policy to protect your personal information, and ensure that your account is insured.
Hope you found these tips valuable and will aid you with your search for a suitable online trading account. I am currently in the process of evaluating several online broker trading accounts. About 12 years ago, I opened my first online stock trading account with TD Ameritrade (it was just Ameritrade back then). Since then I have not looked at other companies or searched for other options. Well, over these 12 years or so, a lot has changed and there are a lot more options out there. Its time to review again and I plan to post a summary of my findings for our members. Keep an eye out for the report!
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About the Author
Wealth Builder is part of the community at Financial Resource: Your Path to Financial Freedom!
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