Know Your Broker Before Trading Online
Proper investment strategies should always include researching your broker, but in today’s world of new technologies and online investment, what questions should you be asking?
The following are some key questions to ask your broker, which can save you both time and money:
* What tools are available from your broker? Stock quotes, news, charting, level II data and advanced order types are among many key tools for traders. Be sure your broker has the tools you specifically need.
* How fast are orders being executed? Keep in mind that online trading can significantly speed up the order process in comparison to placing orders over the phone.
For example, RushTrade offers Direct Access Trading, which allows you to direct your order to the execution venue of your choice. This can result in faster executions, improved price and greater control of your orders.
* Does your broker get paid for order flow? Some brokers may receive payments for sending orders to preferred market makers. This can lead to a conflict of interest. Make sure you know your broker’s policy.
* Do they offer a trading demo? Find out whether there is a cost involved for a trading demo. RushTrade, for instance, offers a demo of its Direct Access software free on its Web site.
* Is the Web site or trading software easy to use? Dealing with a slow or unwieldy site can really hamper your trade executions when speed is the name of the game.
* Can I trade after hours? Ask yourself whether this is important for your investing needs. RushTrade’s Direct Access software will allow after-hours trading.
* Are there any hidden fees? Brokers might tout low commissions but then hit you with unexpected fees. Look for brokers that do not charge low balance, inactivity or maintenance fees.