BROKERAGE ACCOUNT » Online Trading

When a broker performs a trade on your behalf on the stock exchange, they charge you a brokerage fee. This type of fee might also be called a "commission" on the trade. Brokerage fees will vary depending on what firm you go to. For instance, if you are dealing with a discount brokerage or online brokerage, you will probably be paying a lower brokerage fee than a traditional broker would charge. However, no matter what type of brokerage you choose, the cost of brokerage fees will usually be dependent upon the concept of price per trade. For example, a higher charging firm might charge a higher commission for more personalized services or faster service on the trade. Discount brokerage firms usually charge less, but they provide fewer personalized services on behalf of their clients.

When choosing a brokerage, many investors look first at the commission fees charged by a broker. However, there are other brokerage fees you should be paying attention to as well. For example, some brokerages charge maintenance fees if the balance in your brokerage account falls below a minimum balance. You will want to be sure to check the minimum balance requirements when you are opening a brokerage account, to avoid being surprised later by these sort of hidden fees.

Some brokers, like some banks, seem to charge a fee every time you turn around. They have fees per trade, fees for not doing enough trades in a year, and even fees for closing your account if you decide to move on to a different broker with fewer fees. Make sure you read the terms and conditions set by your online or traditional brokerage when you are opening your brokerage account. If you are not careful, maintenance fees on your account can eat up any profit that you might make by trading.

When you start investing, choosing a broker that's right for you is one of the most crucial decisions you'll have to make. If you are considering to opening an account with one brokerage house or another, you should do your research and compare the options available to you. You should also ask yourself what sort of benefits and services you are going to use, and how you are planning to invest. Do you require a full service broker, or are you more of a do-it-yourself investor? Depending on which way you want to go, there are various options open to you.

There are basically two types of brokerage firms: traditional, or "full service" brokers, and what are called "discount" brokers. If you open an account with a traditional brokerage, you will have a personal stockbroker assigned to you who will work one-on-one with you and offer advice on your investment ideas. Your broker will give you reports on how your investments are doing, give you guidance on where the market is going, and be available to you by phone or email to buy or sell any stocks, bonds or mutual funds you may wish to acquire or divest yourself of. In exchange for personalized guidance, you will pay a significantly higher commission for the services of a traditional broker.

A discount brokerage, on the other hand, typically offers no investment advice and simply executes orders on buying and selling stocks and bonds. An online brokerage is considered a discount brokerage, and this type of brokerage is a good choice if you plan do most of your own research and do your trading online. With a discount brokerage, you are not assigned a personal broker and if you call in your order to buy or sell, the first available broker will be assigned to your case.

Typically, a brokerage will require a minimum opening balance in order to open your account. This can be as low as $500, but it's considered advisable to have at least $1000 in your account when you begin investing through a brokerage.

Low fees and personalized service should not be your only consideration when choosing to open a brokerage account. If execution time of your order is important to you, be sure to check the firm's policies on that as well. One online brokerage made its reputation by promising to execute trade orders in 60 seconds or less, or your trade would be free. These sort of perks might be something to take into account when choosing an online brokerage firm.

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