Choosing A Stockbroker
Many people investing in the stock market for the first time need a stockbroker to guide them. However, since there are good stockbrokers as well as bad ones, it is important to be cautious.
Since many people use the services of stockbrokers, word of mouth is probably the best way to find a good stockbroker. When you interview a broker, tell him how much money you want to invest and how active you want your account to be. This way, you will find someone who suits your needs. Enquire how extensive the trading resources of the firm are.
The type of broker you choose also depends on how much knowledge of the market you have. If you are a beginner, it is better to have a full service broker. If you are familiar with the market, then you can use a discount broker. Once you have finalized a broker, you should talk to him about the commission you will pay on transactions. Also discuss how often you may be likely to ask for price quotes.
You can choose to work with a stockbroker on three levels:
- Dealing only: the broker simply carries out your instructions without giving you advice
- Advisory: the broker gives you his expert advice on investing
- Discretionary: the broker makes all the decisions and informs you regularly.
No matter how much confidence you have in your broker, remember that it is your money. Don’t allow yourself to be pressured into taking any decisions.
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