Choosing a stock broker can often be more complicated than it may sound, especially if you are new to trading.
Selecting the right broker can significantly open up your investment opportunities and help your trading experience – and profits – to grow, whereas the wrong broker can do nothing but cause you to spend more money whilst limiting your options at the same time.
With so much information out there pertaining to a whole range of various stock broking companies, it can be hard for those new to the game to make sure that they choose the best one for them.
With that in mind, here are some top tips to help guide you in the right direction when choosing a stockbroker.
Where to Invest
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When choosing a stock broker, you should first and foremost decide where you are planning to invest. If you plan to only invest in shares that are listed in your local stock market, for example, you will have plenty of brokers to choose from in the majority of countries.
However, if you’re planning to invest in an overseas market, you may find that your options for stock brokers are more limited.
Many investors choose to have accounts with more than one stock broker, however it is often more convenient to have a few different comprehensive accounts which cover all of your investments instead of opening a new account every time you wish to purchase a stock listed in a different country.
Check Costs Carefully
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According to renowned UK broker Degiro, “An investor needs to consider not only the fees a provider charges but also the price of the stock they are buying or selling and the technology their provider has to deliver them a comprehensive and cost efficient service.”
Many stock brokers levy a wide range of costs, with some advertising low headline dealing rates, then clawing it all back through high costs such as expensive account management fees or currency conversion.
Because of this, when looking for a stock broker it’s not only important to check the price of the stock which you plan to buy or sell, but also the fees which the broker charges for currency conversion, account management, and any further services which you may plan to take advantage of.
Often, it can be better to go for a broker that has higher stock prices, but cheaper fees.
What You Want
Stock brokers offer a whole range of different services, which is why it is essential that you have a clear idea of what it is exactly that you want from the broker which you choose.
Stock brokers fall into three main types: Execution only brokers, who will simply carry out your trading instructions either via telephone or online, and advisory or full-service brokers who will discuss your portfolio and investment ideas with you and offer advice. The latter can be hugely useful for anybody new to trading.
Making sure that you shop around for the right stock broker for you is hugely important in the world of trading.
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