There are many factors that one should consider when they choose a broker. Depending on what type of account (Retirement, Individual Account) you want to have, and what your strategy will be, will factor into you choosing your broker.
I didn’t have a choice when it came to my main retirement account, my employment chose the broker for me. Although I wish I could change it, it isn’t possible unless I leave and roll it over into a IRA. So while I didn’t get the option of choosing my 401 broker, I did have the option of where I wanted my Roth IRA and Individual account to be.
I started trading stocks back in Jan 2010. Being a newb and not knowing what I was doing, I just googled “brokerage accounts” and found a site that reviewed about 10 different brokers. I thought they were basically all the same and went with one of the cheaper commission ones. What I didn’t know when I opened that account was that the stock quotes were delayed by 15 minutes. The charts were horrible. Even opening up a trade ticket was frustrating. I think I traded a total of two stocks before I started looking for a new broker.
You know the definition of “Insanity”? Doing the same thing over and over again while expecting different results. The new broker I chose was also on the cheaper side for commissions, along with crappy charts and a bad news service. About the only thing that was better was that the quotes weren’t delayed. Although you had to manually click to update them. I had this account for about 8 months before I grew unhappy with it.
I asked a couple of stock trading buddies of mine about choosing a broker. The main consensus was that “cheaper is not always better” or “you get what you pay for”. So after doing some more research, I heeded their advice and opened up an account with TDameritrade. Commissions were about double compared with my previous broker, but the trading tools they offered were awesome. I have the option of four different trading platforms, (with real-time streaming quotes), free Level II quotes, and a pretty extensive educational section (although I like to use other learning sites). The news service is lacking compared with a previous paid platform that I had used, but I was expecting this. I’ve been using this broker for over a year now and so far there hasn’t been any hidden fees. I plan to stay with them. I also have my Roth IRA here but haven’t funded it yet. I do plan eventually to try out Interactive Brokers, but they have a pretty high minimum deposit to start an account so it will be awhile. It is also a good broker from what my buddies tell me.
TD isn’t the only good broker out there, it is just the best out of the 3 that I have tried so far. Their customer service has been pretty helpful every time I’ve called them, always quick to answer a question that I have. I’ve also heard good things about Etrade and Scottrade but haven’t tried them yet.
The point of this post is to stress research. Just like a company that you want to invest in, you should research how and who you will use to invest. Take account of what each broker offers, read reviews on each, and call their customer service to see what they have to offer. Sometimes they will offer some pretty sweet deals. TD might be the preferred broker for how I trade, but it might not be for someone else. It really depends on what you want to do, be it day trading, swing trading or all out long-term investments. Just make sure to do your research (its repetitive I know, but you’ll see me stress that a lot).
What kinds of things did you look into when choosing your broker? Did you just pick one because of the funny baby commercials?
P.S. This is not a sponsored post for TD, although that would be sweet.