BROKERAGE ACCOUNT » Online Trading

Before you begin to build your fortune by investing in the stock market, you will have to open a brokerage account. This is an account opened with a brokerage that supplies them with a fund of money to invest on your behalf in stocks, bonds, mutual funds or other investment packages. Most brokerages require a minimum balance to be maintained on the brokerage account. This minimum balance will vary according to the brokerage, but it is typical to require at least a $500 to $1000 minimum balance in your brokerage account. This amount can be even lower for IRA's, or some other special circumstances such as retirement or education accounts.

Opening a brokerage account is a fairly easy process; most financial institutions will allow you to fill out the application online, or print and mail it in with your check for the opening balance. Once you open your account, you can begin trading. Brokerages charge a fee per trade, which is called a "commission." Commissions vary depending on what type of brokerage you choose, but they can be as low as $5 or $10, or hundreds of dollars if you are working with a very high-end brokerage. Discount brokerages and online brokerages tend to be cheaper than traditional brokerages, since they only execute your orders to trade and do not provide additional personalized money management services and advice. Many traditional brokerage firms, such as Charles Schwab or Merrill Lynch, will offer both types of services depending on what type of investor you want to be.

Before you open your brokerage account, read the terms of service and make sure you understand the minimum balance requirements, any minimum trade requirements, and any other various service fees you might be charged for that is provided by the brokerage. You should compare services, as well as fees in order to choose the best brokerage for your needs.

A commission house is a type of brokerage and much like any other brokerage, it is a firm that buys and sells futures on the stock market on behalf of its clients. However, unlike most brokerages which also buy and sell futures to enrich their own portfolios, as well as for their customer's accounts, the commission house only engages in transactions on behalf of their customers. For this reason, a commission house is called a commission house because it depends exclusively upon the income from transaction commissions in order to sustain its business.

The range of securities and commodities bought and sold by a commission house are comparable to any other brokerage. Commission houses deal in futures contracts, which is a contract to buy or sell a standardized quantity of a commodity on the futures exchange. A futures contract implies an obligation to the holder to meet the terms of the contract on the settlement date, as opposed to a stock option, which grants the buyer the right, but not the obligation to take over a position previously held by the option's seller. Because the commission house debits the customer account every time it makes a sale or purchase on behalf of the account, the investor is able to accurately assess the expense of each transaction and plan investment strategies accordingly.

How much the commission house charges in fees will vary from one commission house to another. It may also depend on the laws of the jurisdiction within which the commission house operates. National and local laws may affect the commission charged by a commission house. They may also offer promotional rates in order to attract new clients to the brokerage.

When choosing a brokerage, you might also take a look at commission houses as an option. Many investors find the predictability of commission houses and the straightforward calculation of commissions to be attractive. Compare the commissions with the fees charged by other brokerages and the comparison may be favorable.

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