Investing in stock requires that you have a brokerage account. Selecting a brokerage account when you are new to trading in stocks can be a challenge. You must conduct due diligence and carefully contemplate on the available brokers to get the best online stock broker for beginners.
Choosing the right online broker depends on factors that include your priorities and trading style. Some will put more emphasis on the least costly brokers whereas others will go for the technologically advanced trading platform. These factors vary among the brokers hence the need to be careful when choosing.
- Does the broker have a respected name?
It is crucial that you subject the brokers to this level of scrutiny. This will involve going through customer reviews to see what previous clients have to say. Traders will be a reliable source of information about brokers. New and reports on the internet will be another excellent source of information when doing your research. A broker that treats beginners professionally and helps them acclimatize with the systems is one worth getting an account with.
- What is your trading style and technology needs?
Beginners may not need to trade frequently hence the need to avoid the brokers who charge inactivity fees. If you do not meet the minimum monthly trades, some brokers will charge you, newbies do not need such pressure. You may just need the basic products and not the extras that may end up costing a lot.
Get a broker with just what you need. Some tutorials and videos are necessary to guide a new stock trader, the broker should have such on their website. If you are an active trader then you need a broker with a trading platform that supports your trading with research, trading analysis and has discounts for frequent traders.
- Consider the account minimums
Each broker has a different minimum investment amounts, with most of the online brokers requiring $1000 or more. This high amount is preferred by brokers since it allows you to diversify and even invest in mutual funds which have a high minimum investment amounts. Even with these rules, you can still find a reputable broker which require no account minimum or one with a reasonable minimum.
- What are the costs and fees?
Other than the trade execution fees, you need to consider the other associated fees before opening an account with any broker. Most new traders fall in the 20s or early 30s meaning their budget in most cases is limited. High fees and costs may cut into their investment amounts if the broker has higher than average fees. These include the minimum balances, the margin account minimum balance, withdrawal fees, and those with complicated fee structures that only become clear when you are charged. Above all, look for hidden charges that may end up drowning you along the way.
- Does the site have add-ons?
Look for the online trading platforms that walk through the learning process with the beginner. The best online stock broker for beginners offers transparency, analysis, ease of use and the ability to scale up by adding add-ons. The more the add-ons, the better it is for a beginner who can add them as he goes on.
- Does the broker have follow up services?
A broker with a reliable customer support and is available to guide the new trader is one to consider using. Does the broker have an alternative solution for the clients in case the internet goes down? As a beginner, you need a lot of help though too much leniency can be a bad thing and you should be cautious of such.
- Is the broker innovative?
With the fast pace at which technology changes in addition to changes in the broking business, the best broker will be that which is at par with the changes. Those who stick to the old methods and fear change may be of no benefit in the near future. Go for a broker that uses technology to make trading more predictive, have analysis tools and bases the business on the latest technology.
The Bottom Line
You cannot forever postpone selecting a broker to work with. When the time comes to make the big decision, choose a broker with the qualities that will suit your needs. As a beginning trader, you need a broker with a user-friendly trading platform, favorable fees, fair minimum balances and adequate support. The best online stock broker for beginners will not have hidden fees and should have a platform that can be scaled up as time goes.
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