As soon as you have done what is needed to test a trading system, you will find yourself ready to trade. This means you need to select a decent broker. Many markets make it a requirement that all traders perform trades through a broker. This means you have to select from two different types of brokers: the full-service broker and the discount broker.

At the key to the heart of finding a reliable broker means seeking one that suits you and your individual trading style.

The following are a number of questions you should take into consideration when choosing an online or full service broker.

1. What exactly are the real commission rates available?

The commonly advertised rates for brokers is one that will vary between It is helpful to look towards a full-service firm and remember the commission rate is negotiable based upon how much business you may be running via the account. That is why it is critical to negotiate with the firm and seek the best rate possible for your situation. This will aid in lowering expenses. to per individual trade for an online broker and then the costs may be upwards of 0 (This could be 1-2% of the size of the trade) when you are seeking to access a full-service venture. That is why it is so helpful to explore the advertised rate and see what it is truly applies to. In a great many cases there will be higher brokerage fees for different trading instruments and those traders selecting a “live” broker on the phone. The fact remains that one might find the advertised commission rate might not actually ever apply to the individual types of trades you opt to place.

2. Are there any other extra fees?

A variety of companies, both in online and in the full-service arena will affix extra fees that are hidden and may add a lot of costs to the individual trades. There are a number of common charges that one must raise his/her awareness towards including the transfer of funds (this includes those funds dually in and out of your account), insurance, administration fees, penalties and fines for late payment penalties etc. The bottom line here is you really need to stay on top of the fine print!

3. Can you trade multiple markets, and what are the commissions?

When your trading progresses significantly, you might decide to trade in different markets. It will be much better to stick with a broker you have a trusting relationship. This means you need to plan ahead and select a broker that can service your needs as you grow.

4. Will the brokers pay their clients interest on the remaining balance of non-invested cash in the account?

Some online and full-service brokers definitely do pay interest roughly in the 3-4% range.

5. Is a large deposit necessary for the start?

Beware of high minimum balances required to open an account. While some companies have good rates, you may need ,000 to start. It’s a lot of money to invest with a company you haven’t traded with before. Typically full-service firms will require more capital to start an account than a discount online service.

6. How reliable is the service?

The expedience and the reliability of online trading are factors that deliver the utmost important attributes. Imagine being a client that suffered a ,000 loss due to being unable to log into an account due to a server issue. Such issues happen and, thankfully, some services offer backup plans to deal with such issues.

For an online broker, check that they offer STP (straight through processing). This means that trades are placed in the market as soon as they are made. With some discount brokers trades are place manually, so your trade may not be actioned until sometime after you’ve placed it.

As such, they are not actioned until after being placed.

7. Are any automatic features offered?

Examine the common extras the company has to offer and then weigh it against the extras that will complement your trading styles. You should not be interested in automated features that will never be used. Such services will be worthless to you.

One feature I quite like is automated stop losses. This feature enables me to set my exit point and it’s automatically triggered. Another one to look out for is ‘contingent order’ - do they allow you to place conditions that must be met before an order is automatically placed? For example, if the share price breaks out from your specified buy point of , you might like to set an automatic buy trigger.

The automated extras are commonly associated with online brokers, but it may be possible to find full-service brokers that make such offers as well.

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