Brokerage Firms – Finding the right outlet for your investing is without a doubt the second most important part of your journey. The first being your investing education.
Discount Brokers – Discount brokers have the lowest commissions. They can vary between $5 – 15 per trade.
The main aspect of a discount broker is that there is zero help from the actual broker with your equities and positions. You do all your own due diligence, deciding and choosing for which trades you want to do. And then the actual execution of the trade.
However, this doesn’t exempt the brokerage company to have bad customer service. You are still a ‘VALUED’ customer and should get top-of-the-line service. The only thing is you won’t be getting personal help with financial advice and only you will be pushing the buy/sell button for your trades. But with all my experience, you will be working with one person over and over again. They have the power to become a full service broker if asked or direct you to someone who can (if their firm has that feature), but your fees will become higher.
Full Service Brokers – You will be paying premium rates for each trade anywhere between $25 – $50. However, you are getting a lot more for your money.
When it comes to picking which broker you want to work with, you must first decide: do you want to be in full control of your own money and investments or do you want help.
My advice – find a discount brokerage firm which offers both services discount and full service.
A lot of full – service brokerage companies don’t offer the discounted commissions and then once you become savvy enough to take over your portfolio and accounts you have to transfer it over which is time consuming – but definitely worth it.
However, if you feel you won’t want to ever do your own investments, finding a full service broker can be extremely rewarding. But again, you must do the research and homework to find the best one for you!
NOTE: if you decide to go into futures, that is a whole other market. While most discount brokers work with future contracts, there are special brokers that only work with Futures. Read more about Future and Brokers for Futures here.