One of the most difficult things I found when getting involved in the stock market was how to identify a good stock broker. Unfortunately, I didn’t have any trusted advisors who could recommend a company to use so I had to work it out for myself. The problem with that is, as a beginner, how do you know what to look for? With trial and error I found a respectable broker but I thought I’d list a few essential things to look out for before you jump in and open an account with someone.
Firstly, find out the cost of each transaction. Yes believe it or not you do have to pay each time you buy or sell stocks. This is a charge on top of whatever you pay for the shares! If plan to buy a lot this can mount up so try to go for a reasonably priced broker. The way to avoid this is to buy stocks in bundles infrequently but it’s still important to keep the transaction costs as low as you can especially if you are just learning about stocks for beginners.
Finally, make sure they operate online as this is quickest way to trade these days. It’s highly unlikely you will find a broker who doesn’t but most of the brokers online now offer an execution only service which simply means they will buy and sell whatever you tell them to. There is no thinking behind it and they rely on you knowing what you’re talking about. If you want a better service then you’ll have to pay for it but it might be worthwhile if you are a beginner.
In conclusion, to buy and sell shares online you will need a broker and I believe by following the guide above you have a much better chance of getting quality service. As long as you can keep the transaction costs low and the speed of execution high then you have a successful combination.
This stock market investing post was a guest post from one of my readers. For more articles by Ty Coon check out my series on buying stocks.
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