Aug 10: How To Select An Online Trading Broker – PART 15

Welcome back to the 15th part of the Ultimate Trading Systems article series. In this lesson, we`re going to discuss: How to select an online trading broker.

At this point, you should have a fully tested system ready to trade. The last piece in the puzzle is to select your online trading broker. Most markets require that all traders must place their trades through a broker. Fortunately, this choice is easy… there really are only 2 types of online trading brokers: the full service online trading broker and the discount online trading broker.

A full service online trading broker offers advice to their clients for which a premium is charged. Given previous discussions on the importance of decision-making, you should recognize this service as being unnecessary. If you are following your trading system, such advice will only serve to confuse your decision-making processes.

Then there is discount online trading brokers… these firms allow you to make all the decisions about how to trade your account. You only need to call, place an order and the firm will execute it. Discount online trading brokers` do not offer advice to their clients; hence, there is no need for them to employ research staff. This reduces their overheads and makes it possible to offer discounted rates.

How do you spot a “good” online trading broker?

First off, the key word is “good.” In this case, it means good for you, your trading style, your personality, and your needs. I recommend that my clients open an account with a discount online trading broker. That said, the online trading brokers you will ultimate choose will vary depending on where you live and what market you decide to trade in.

Here are some questions you should consider when choosing your online trading broker:

1. What are the real commission rates?

Advertised rates for companies vary around $0 to $40 per trade; the average rate is around $20. However, look closely at what the company`s advertised rate really applies to. In the majority of cases, there will be higher brokerage for limit orders, options and those using a `live` online trading broker on the phone. You may find that the advertised commission rate may hardly ever apply to the types of trade you do.

2. Are there any extra fees?

Many companies charge extra `hidden` fees which can add significant costs to each trade. Charges to be aware of include those for transferring funds (both in and out of your account), insurance, administration charges, late payment penalties and more. You really need to look at the company`s fine print or e-mail them for more details.

3. Can you trade multiple markets, and are the commissions the same?

As your trading progresses and you decide to experiment with new markets, it`s easier to stick with the online trading broker you have come to know and trust. Therefore, you really should plan ahead and choose a online trading broker than can service your needs as you grow.

4. Does it cost extra to make a trade by phone?

In addition to other charges most firms have higher rates if you want to place a trade over the phone, using a `live` online trading broker. You may be forced to use this if their connection is unreliable, so be sure to choose wisely.

5. Will they pay you interest on the balance of uninvested cash in your account?

Some pay in the range of 3-4%. A nice little bonus!

6. Do you need to start with a large deposit?

Beware high minimum balances required to open an account. While some companies have good rates, you may need $10,000 to start. It`s a lot of money to `punt` on a company you haven`t tried before.

7. How reliable is service?

Speed and reliability of online trading is a major problem. I know of one client with a major discount online trading broker who watched as his account dropped by $50,000 because a system fault at their end meant he couldn`t log on for a whole morning! You must know about the quality of service of the online trading broker before you start – speed and reliability of access, their software, and so on or it will cost you money at some point.

If you`re still not sure where to start when choosing a online trading broker, I have setup a search engine designed specifically to help you find one.

Click on the link below to go to Online Trading Broker Search – The Worlds 1st Online Trading Broker Search Engine.

http://www.meta-formula.com/brokersearch.html

Here`s how it works, simply enter “online trading broker” followed by a + then your market and then click search.

For example, for a commodities online trading broker you would enter the following search term below:

online trading broker +commodities

Once the results come up, select from the best online trading brokers worldwide. It`s that easy!

You may have to do some research here, but once you have found an appropriate online trading broker, open an account and then you can start trading. Write down which online trading broker you will use:

Learn how to pick the PERFECT Online Trading Broker.

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MUST DO ACTION STEPS:

1. Find and open an account with a discount online trading broker. Click Here to visit Online Trading Broker Search. http://www.meta-formula.com/brokersearch.html

2. Begin trading your newly designed system and remember to follow it flawlessly.

Remember to keep any eye out for my next article because you will learn the most important step that most people forget.

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You`ve Read Part 15 of The Ultimate Trading Systems Series –
The Formula For Designing Profitable Trading Systems.
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