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How to Choose a Penny Stocks BrokerBy Nir Dotan If you have decided that you want to dabble into stocks investment, particularly penny stocks, you will need to hire a broker. Penny stocks brokers are usually one-stop shops for the buyers and sellers of penny stocks. They maintain an updated database of the different penny stocks being traded on the OTCBBs and the Pink Sheets, enabling you to make a choice from a varied array of possibilities. There are many brokers out there, each one competing for your account, so you will have to be careful when you choose. If you are serious about stocks investments, then you're going to be in this for some time, and will be working closely with your penny stocks broker. Besides having a broker whom you can trust and rely on, you want somebody you will be comfortable working with. Full Service vs Discount Broker There are two kinds of brokers. A full service penny stocks broker will give you financial advice as well as manage your penny stocks portfolio for you, for a fee. A discount broker will charge you only minimal rates because these services will not be part of the package. If you don't understand very much about stock investments and trading, a full service broker can advise you. If you prefer to do the researching and selection yourself and only need somebody to place the order for you, then a discount broker will serve your purpose. Whichever one you choose, make sure he is a licensed and registered one. Choose one broker the one you feel you can work best with instead of two or more. It is easier to track and manage your portfolio when only one person is handling it. Criteria for selection Commissions. When choosing brokers, check out the broker's fees and commissions. Find out if there are any hidden charges that will mean extra expense for you. Is his asking commission bigger than that of the other brokers? Although the commission rate should not be your sole criteria for selection, you want to go with a broker that charges reasonable brokerage fees and commissions. Speed in executing your order. Is your broker quick to act upon your orders? Many times, speed is of the essence especially when the penny stocks are fluctuating fast. You want a broker whom you have easy access to and who can quickly execute your order before the prices change. Reliability. How reliable is the broker's service? A good broker will take steps to make sure his internet and computer setup is prepared against internet disconnections and website breakdowns, especially when the penny stocks are time sensitive. Also, how long has the broker been in business? Policies. Find out about the broker's charges, such as if there is any minimum required balance, commission rates, monthly fees, and what his trade shares policies are. Trade shares policies differ among brokers one broker may have a policy that does not allow the trading of shares under $1, or requires a minimum deposit of $2,000. Another broker may not have any such limitations. Accessibility. You want a broker whom you have access to, whatever happens. Phone accessibility is very important, especially when websites or internet connections are down. The last thing you want is to sit around all day waiting for your broker to get back to you, especially if a trade goes wrong. About the author Nir Dotan is a writer and promoter of Penny Stocks services, and Penny Stocks Preferred source for the latest news and information on the best and brightest Small Cap Stocks. |
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