The Most Popular Question Is…
Over the years, we seem to get asked one question time and time again. And it comes from all around the world. Beginning traders and experienced traders alike are always emailing us the same question:
“What broker should I use?”
It’s a great question. But like dancing your way through a field of landmines, answers can be dangerous. Let me start off by saying, Hyperion Financial Group doesn’t have any type of relationship with any broker. As a result, we’re hesitant to recommend any particular broker to any particular reader.
Now I know that stance seems strange… but we have a reason.
We purposely don’t recommend any one broker because every broker is different… and every trader is different as well.
You see, each and every broker provides different services. Their trading platform has different bells and whistles. And their trading focus is as varied as the colors in the sky at sunset!
Let me give you an example.
If you’re looking for the best margin rates around, Interactive Brokers advertise margin rates as low as 1.25%. That’s great, but we don’t ever recommend trading on margin… even experienced traders have been known to get burned leveraging up a bit too much.
That said, using margin is a widespread practice.
Let’s look at another option – education.
Some companies offer lots of proprietary research as a big draw to investors. Some brokers are even offering trading classes and educational programs to help people learn about investing. TD Ameritrade, Scottrade, and Thinkorswim are all well known for that aspect.
If education is a focus, one of those brokers might be best.
Other brokers are getting very tech savvy.
They offer mobile trading through your cell phone. This is a great feature for investors on the go. And anyone who doesn’t have time to sit in front of a computer screen all day will find it useful too.
I’ve got to be honest. Mobile trading isn’t that appealing to me. (I guess I don’t trade enough) but I know for other traders it’s the only way to go.
Another aspect to look at is area of specialty.
Some brokers are more focused on trading stocks. Yet others are carving out a niche for themselves focusing on options. Knowing which broker focuses on which areas can be a very helpful study.
To find the perfect broker, take a look at a few. Check out their trading software. Some charting packages might be better than others. Look at what research and educational classes they offer.
And don’t forget cost.
The costs of trading will vary from broker to broker. It’s an important consideration, but it shouldn’t be your only deciding factor.
Once you’ve seen a few different offerings, sit down and decide what’s most important to you. Figure out which platform you’re most comfortable with.
If you want to dig even deeper, you might look at the research others have done on the industry. In the March 15th edition of Barron’s, they did a ranking of online brokers. Barron’s compared brokers across the market and looked at everything from their trading platform to their costs.
They went as far as picking top brokers for investors trading stocks and options. They even looked at high frequency traders and those who hardly trade at all. The article was quite enlightening.
I’d recommend it highly for anyone looking to open a new brokerage account, or anyone thinking of changing brokers. Happy hunting!
Category: Technical Analysis
