Zerodha Account Opening - How to Select a Stock Broker in NEW TO TRADING & INVESTMENTS? - To help you get the best returns from your trades, you will need a good broker. I would recommend staying ...
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12-21-2010 09:51 PM
How to Select a Stock Broker
To help you get the best returns from your trades, you will need a good broker. I would recommend staying away from online brokers and those offering discount brokerage and instead focus on finding a good traditional broking service. It will cost more per trade but believe me, this will be a small price to pay for better order execution and service rendered. A good broker will always get you in and out of the market at better prices that an automated online system and will be there for you at all times. And this will make a difference to your profits. Here's a few rules on what to look for when selecting a broker.
5 Steps to Selecting a Quality Broker:
- Must specialize in the market you are going to trade. Ask them how long they've been transacting on the particular market and what their level of experience is. Give preference to a broker that's been around for at least 10 years and seen some ups & downs.
- Must allow Contingent Order placement. That is, allow you to place a buy stop, stop limit, stop loss and take profit orders that are triggered based upon the price action of the stock. Since the last few years, a lot of brokers have finally caught up and begun offering this facility. Don't ever trade without it.
- Must execute your orders at all times exactly as specified by you, without a question. You should decline advisory service your broker may want to offer you as it can cloud your judgment. You want a broker that transacts, not questions your orders.
- Must be reachable by telephone at all times during working hours. On the occasion, you may need to contact your broker by phone to discuss matters that would otherwise be lengthy via email. Make sure you only deal with a broker who is happy to be there for you, at all times, and can be reached when needed.
- Must not be a friend or relative. Keep your relationship with your broker professional. That is, your broker should probably not be your cousin or close friend. The reasons are obvious.
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