Day Trade Stocks - How To Pick The Right Broker
Trading today is very different compared to the trading that took place about 5-10 years ago. Access to quick online trade execution, which was a luxury about a decade ago has become a standard amongst most brokers today. Nearly everybody with some money has dabbled in trading stocks at some point because its fast, easy and cheap. For some its profitable and for others it can be a costly experience. Which category do you want to belong to?
If you said the first one, then lets discuss the criteria for picking the right broker especially if you want to make short-term trades:
Cost
You might be wondering why we have listed this first. Its not necessarily because we think cheaper is better. Its because thats the first thing that every broker advertises and every trader looks at. So, lets get it out of the way shall we. When you start making your list of brokers, do not eliminate brokers solely on price unless the trade cost is way beyond your budget. Always compare the price of atleast 5 brokers before you choose one. This is because some brokers have lower prices depending on the number of trades you are going to make. As a rule-of-thumb you can assume that if you are just starting out you will make 10-30 trades in a month. If you are an intermediate investor, then you could be making 50+ trades a month. Keeping these numbers in mind, you can figure out what each trade will cost you.
Execution
When you are looking for short-term trades you might want access to a few bells and whistles such as real-time stock quotes and some additional screeners. Starting out, you might not need these but its better to factor this into your decision making. Some tools can save you a lot of money through their use and others are more or less distractions. It will depend on your trading style. Ideally, you should not be relying on your broker for too much advice. If you do, then your transaction costs could be significantly higher than what is advertised. Read the fine print.
Platform
All the different brokers don't offer the same features. Sometimes they offer similar features but its easier to understand and use with one broker versus another. Look around the brokerage website for screenshots and demos. Sometimes they offer interactive tutorials or let you test drive the site. Look for answers to some basic questions in the online help section. If they aren't answered do they have an easy way to contact support? Send an email or two with some questions and see how quickly they respond. If they are really bad when you aren't a customer its not very likely that they will be much better if you do become one. Through these steps you should get a 'feel' for the brokerage and its services without putting any money down.
