All Discount Brokers Are Not the Same

Article Written By: danielletaylor1

When looking for a discount broker, you should consider all the variables before deciding which firm to use for your investment needs. Reputation and Rankings is the first and foremost important step you must follow. It might not necessarily be the smartest choice to choose a discount broker based on their TV commercials. While it probably gives you a good idea of their size and strength, it does not always equate with being the best.

Many of the larger national firms spend millions in advertising to try to attract new clients. Every new client is a potential source of revenue for the discount broker. There are a number of well-established ranking services that can give you a good idea of which broker is best for you. Many of the financial magazines publish a list, ranking the different major discount brokers. Talking to both present and past users of the brokerage service can go a long way toward understanding the company and its reputation. Naturally avoid those with poor reputations and focus on those that espouse integrity, efficiency and overall customer satisfaction.

Price Per Trade Matters

One of the most important reasons people sign up for the services of a discount broker is to save money on trades. The more active a trader you may be, the more important a few dollars difference can make. If you are an active trader or may be classified as a Day Trader, you may execute 20, 30, 50 or more trades in a month. If you pay $12.00 per trade at one firm and another offers their services for just $7.00 per trade, the savings can add up to several hundred dollars each month.

Price Alone Does Not Rule

While it is nice to get a low price on a trade it should not be the only criteria for selecting one broker over another. There are some online discount brokers who, in order to try to attract new clients, offer a ridiculously low fee for each trade. You may see some that advertise trades for $3.99 or even less. In most instances, there is a catch to such low prices. You may get very slow executions of your orders. You may have limited access to information about stocks and other financial instruments. There may be a minimum number of trades you must execute in a given period to qualify for the very low rate. The point here is to consider all discount brokers as a whole company and not just as the lowest cost facilitator of trades.

Customer Service

Here is an area that many people do not think about until after they sign up for a discount brokerage account. When you first sign up, you seem to get a live, friendly representative who will answer all of your questions and reassure you that you are making a wise choice by signing up to their firm. Does that same level of customer service continue after you become a client? Look for a company that brags about their customer service. You can call up their toll-free number and try to have them answer a question just to see how efficient they are. Not being forced to hold too long and having access to helpful and competent representatives is indeed an important consideration when choosing a discount broker.

An important feature for most investors using a discount broker is the amount of information available to help them make a well thought out investment decision. Discount brokers all provide some level of educational material, but the amount and the quality can vary greatly. It costs money to provide most financial information. A broker may have to subscribe to various information providing entities such as general financial news, in depth reports about individual stocks, rating or ranking services, technical analysis and expert stock selections.

The larger, more well-known brokers tend to have the most information as they have a larger client base and can spread out the cost of information over a big group of investors. There is never too much information, but, too little is a definite negative for any discount broker. The more informed you are about a particular investment, the more likely you will be able to find a winning stock.

About the Author

Danielle Taylor - discount brokers online. Always looking for the most favorable investing options, she tends to end up planning her finances at www.firstrade.com more often than not.

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