If you are interested in investing in the stock market, you must solve a difficult problem: Which brokerage company should I work with? As we all know, choosing a broker is as important as the investment itself, let us see which variables must be analyzed before choosing a stock broker!Picture src. pixabay
Let us first look at what the function of a broker is: a stock broker will take over and execute your securities buying and selling orders (such as stocks) and act as an intermediary between buyers and sellers. The compensation of the broker you choose will depend on the fees charged to execute the order. This means that the greater the volume of trades he executes, the higher his pay, so some brokers may recommend that you buy stocks that are not in your best interest. You must identify and avoid these brokers. Brokers are also called financial advisers, investment advisers or financial advisers, and they usually work in brokerage companies. Brokers usually charge commissions involved in this operation, as well as the cost of each stock purchase. A higher commission means that every time you buy a stock, you have to wait to get rid of it at least to rise above the commission level.
Currently, the commission range excluding VAT and stock market fees can reach up to 0.5%. From there, it can be said that the service is expensive, although it may sometimes be worth paying for the highest level of consulting services. Before hiring, check the commission plan and value handled by the broker.
Some brokers charge a fixed amount, which is related to the amount of operations you perform in the market. In addition, some brokers deal with variable collection methods, in which the broker-dealer charges a certain percentage based on the transaction volume. For each purchase, the market limit is also between 0.4% and 0.5%. For its part, some brokers operating via the Internet have a fixed cost (not exceeding a certain amount) for each transaction, and each transaction starts at $10,000.
There are other costs, such as the custody of stock ownership. Although they have a marginal incidence, they are charged separately. Therefore, please carefully evaluate how you want to operate in the stock market, as variable commissions may be a good choice for small transactions.
In the stock market, the outcome of a successful transaction always depends on being carried out at the right time. If your broker is late to make a buy or sell order effective, you will feel that you cannot use the exact time when the transaction can bring you better dividends. You must be clear that regardless of the size or type of investors, the broker will execute these orders in the order of receipt. Therefore, directly work with the broker to find out how long it will take to execute orders (regardless of whether they are executed automatically) and until when these orders are received. This information may be of great help to you, because the concept of opportunity is extremely important when trading with a broker.
Do you have your own investment portfolio?
This is not always important when hiring a stockbroker. The risk of a broker having its own investment portfolio (that is, a portfolio of assets invested by the same company) is that it may conflict with customers. Brokers often cover up the fact that they own their own portfolio, so you must be careful.
These are the main variables that should be considered when choosing a stockbroker.In order to make an informed decision, we also recommend that you read other discussions How to choose a stockbroker.