course price is of primary concern. Online trading is popular partly
because it offers discount commissions for investors who do not
want to pay a full-fee broker for advice they could have discovered
themselves on the internet, or for trades where they do not want
even among online brokers the commissions can vary greatly and comparison
is near impossible with each calculating commissions on different
basis - some using the value of your trade, others the number of
shares bought, and others the frequency with which you trade. www.uk.gomez.com
will assist in price comparison. Also visit www.investorschronicle.co.uk.
But there is more to online broker selection than price,
if there wasn't then Schwab in the US, which is one of the most
expensive online brokers, would not have the largest market share.
The most important factor in selecting an online broker was customer
service according to a recent study by JD Power and Associates.
The same study, based only on US brokers and traders, found Schwab
topped the list for offering greatest customer satisfaction.
in service is an essential pre-requisite for any online trader.
There is no point saving £20 in commission on buying a stock,
only to find you can't sell it because your online broker has broken
down. Such 'downtime' by online brokers is becoming increasingly
frequent in the US, and only last month even the mighty Schwab had
one full hour where trades could not be placed. In a survey by the
TheStreet.Com, again a survey of US brokers by US clients, DLJ Direct
came top in the category of reliability.
these surveys are conducted on US brokers, I still look at them
with interest, on the basis that the UK apple will not drop too
far from the US tree.
trading is about more than placing a trade through an online broker
instead of phoning a traditional broker. Trading online profitably
still requires research to arrive at stock picks, and the internet
is an excellent resource to offer this. I always check to see what
research the online brokers offer. Do they provide free portfolio
monitoring, charting, news from major wires, research from renowned
institutions, commentary, or are they just a web-site appended to
a traditional brokerage?
B Patel is the author of Net Trading: Get online with
the new trading strategies; Trading Online: A step by step
guide to cyberprofits. The Mind of a Trader: Lessons in trading
strategies from the world's leading traders.