2007-07-12 18:44:44
Direct Access Trading: What You Need in a Broker
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When it comes to direct access trading solutions, there is plenty of competition out there. Different companies have different selling features in order to get people through the virtual door to open an account.
There are certain things that I would recommend a broker offering you before you decide to go with one particular broker. Here is my list:
1. Per share pricing. The days of outrageous flat fee commissions are over now. If you are a smaller trade, doing 100-200 share lots, you need to find a broker that offers you per share pricing. Instead of paying $10.95 per trade, you could be trading $1-$2 per trade. Over the course of a year, especially if you are an active trader, this adds up to be a huge amount of money.
2. Long operating history. There are plenty of fly-by-night direct access trading platforms out there. Try to go with a company that has at least a five year operating history. A broker such as Cybertrader, that has been around for almost ten years now, would be a good choice. Plus you get the added benefit that they are wholly owned by Charles Schwab, lessening the chance of any shenanigans.
3. Software packages that match your needs. If you need real-time watchlists and cheap level II quotes, then make sure that your broker offers this, and offers it at a reasonable price. You have to really watch the fees that some direct access brokers charge you for using their software packages. Read the fine print.
4. Quick money withdrawals and deposits. Ask around. There are plenty of message boards out there with people that are using the broker that you are thinking of going with. Ask them how fast the broker is at processing your deposits and withdrawals. Avoid companies that are slow at processing money like the plague.
5. Strong customer service. Even if their website answers all of the questions that you had, give their customer service department a call. Ask questions. See how strong their service is. If you get a bad feeling about the service that is being provided, then don't go with that broker. When you have a real problem (trade frozen, account not working, etc.) you need to have a responsive customer service department that can help you out.
Filed under: Stock Market Education | General Knowledge
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