Stock market commentary, analysis, insight and opinion of the RightLine Editors is available every Tuesday/Thursday evening & Saturday
afternoon. The following is excerpted from the:
October 16, 2018 - The RightLine Report
Notes From The Editor
Let's continue our recent discussion about brokerages. We're doing this from a swing-trader perspective, although several of these factors apply to anyone trading stocks online.
Commissions are one of the first considerations when you're choosing a brokerage firm. Fees, however, might be less obvious. Sometimes they're even hidden away in the fine print of your sign-up agreement. Things to watch out for include a minimum account fee (you'll be docked if your account goes under a certain level), a monthly maintenance fee, various service fees, platform fees, or settlement fees if you're trading on margin.
These can really start to add up, taking an unnecessary bite out of your account.
For most swing traders, one consideration that's probably further down the ladder is execution speed. In the scope of a trade that's been open for several days, the difference of penny or two won't make a substantial difference. So even though you might opt for using a specialized trading platform on your PC that ensures speedier execution and up-to-date quotes, it's not necessary. As long as their system is reliable, you can do just fine by using the brokerage's website to enter entry and exit stops.
People like stable companies when it comes to all matters financial, so not surprisingly, many traders naturally gravitate toward the big-name brokerages. These could very well be good choices, but be sure to do your due diligence first. Having a huge customer base can translate to shoddy customer service and overloaded trading systems.
On the same token, don't be scared to consider smaller brokerages that aren't household names. These sometimes offer the best combination of low commissions and solid customer service. The good ones will treat you less like a number and more like a valuable customer.
Online reviews are the best way to learn about a brokerage's performance. Put more emphasis on recent reviews, as they give a better indication of the company's current pros and cons. If you can't track down any informative reviews of a firm, you may want to steer clear and continue your search.
Finally, don't be afraid to ask friends who trade. Their trusted opinion can point you in the right direction - especially if it matches what people are saying online.
Here's to profits!
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