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Choosing an Online broker to Buy Stocks in the Stock Market

Posted on May 13, 2011 by Thomas DeGrace

One of the first steps to investing in the stock market is choosing an online broker.  An online stock broker is that person or company who is hired by an investor to buy or sell shares or make any sort of financial investment on his behalf. This person will make all dealings with you through the web. These people or company is hired because they have a better understanding of the market and know what might be a correct investment decision for the investor.

Types of Brokers

There are three types of online stock brokers and the three come at their own expense. It would be cheapest to your pockets if you higher an execution-only stockbroker. This type of stockbroker carries out the financial transactions and market investments as per your instructions. The other type is the advisory-broker. This type of stockbroker will advise you on how you must make your market investments, but they themselves won’t do it for you. It will be costlier to hire this type of stockbroker than the execution only broker. Last but not the least the discretionary broker is that professional or company who takes all the investment decisions for you and carries out the same. It can prove to be quite expensive to higher such brokers.

You have to choose your online stock broker only after you have made a better judgment of yourself and your understanding of the market. If you are a person who fears risks and is not confident enough about your understanding of the market, you should hire a discretionary or an advisory broker. And if you feel you understand the market well and is capable of taking the correct investment decision for you, you should choose the execution only online broker and save the extra fee.

You can now avail the wide range of investment products through the online brokers. This may even include overseas investment product. But the prices of the product are bound to vary from one broker to another. The online brokers also come up with additional services for the clients. These services are like the ones that help you to improve your trading skill and any other broker tips. But before you agree on availing a certain offer and start paying for it, you must make sure that the service is of some use to you. You wouldn’t want to pay extra for a service that is completely useless for you, would you?

Charges for Online Brokers

So what are the typical charges that the online brokers charge? The dealing commission is charged by all online brokers. That means you pay a commission fee on every buying and selling of stocks made for you. Some brokers can prefer an annual or quarterly fee for all the administrative services they provide you with. Some brokers can also charge for administrative services such as registration, custody, limit order, etc. But this again is not mandatory and varies from broker to broker.

The market now offers a very wide range of investment products and you can avail all of them through your respective online stock broker. Your online broker can make you accessible to a varied range of funds. They can also help you deal in small capital and OFEX. Your online broker should have access other than the traditional United Kingdom Equity Market. He should be able to make dealings with International Stocks. Online Brokers also come with facilities such as the CFD, Spread Betting and the ISA wrapper.

The services that the UK online Brokers provide are a bit different. They make a good use of technology and their customer service is up to the mark. First and foremost you need to open an account and then you need to fund it before you can start trading. Rest you leave up to your online broker and you are just there to avail the service and place the order as per your choice. You can place a market order, a limit order or a contingent stop order as per your choice or the advice of your online broker. It is the primary job of your broker to bring you the best deals in stock trading and the ones that will prove to be beneficial to you.

So what are the points you must take into consideration before you decide upon an online stock broker? As already mentioned you have to choose in accordance with your level of understanding of the market. The trading profile of your and your online broker should match up. That means the services and the price structure of the services your broker provides should suit you well. Choosing the right online broker is extremely important as that will save your time and money.