Times have certainly changed in the market and one of the things that you need to know when discovering how to get started in the stock market is the type of stockbrokers available. It used to be that trading stocks meant having your own stockbroker that you would call or visit by appointment. Nowadays, you can still use this method and hire a stockbroker or you can use one online.
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Watch out for scams
While online trading is a well-respected industry, there are some scam artists operating in the field. When you consider the large amounts of money that are being dropped into the stock market every day, it’s really not surprising.
You don’t have to be too worried about this, however, as long as you perform due diligence before using an online broker. It’s easy to find out about a stockbroker’s reputation on the Internet from the company website itself and through other people’s reviews. It is not enough to rely on a company website though since it can be presented very well to make it look legitimate. Take a look at forums through a Google search to make sure that the company you plan on dealing with is really on the up and up.
An online broker offers the same type of services as the ones being offered by brokers in your local community. He has to figure out which stocks would be best for you to buy according to your plans and goals.
What to look for
When you’re first finding out how to get started in the stock market there are a few different things you should be looking for in an online broker. Here are some of the most important ones.
1. Account levels
Different charges will be laid for different account levels. As you can expect, larger accounts will usually be offered discounts for their trades. If you see an advertisement for a reduced fee, make sure that it applies to the account level you’ll work with when you first start.
2. Minimum balance
Look at the company website to determine the minimum balance required to get started. As well, there may be minimum maintenance amounts that need to be kept in place so that your account can remain active. You certainly don’t want to start trading only to find out that your account was closed due to not maintaining the minimum balance.
3. Trading software
Is there trading software available to all account levels or is it only offered to traders that hold a higher level? In some cases you can get access to software at a lower level and this can be quite handy to have.
4. Working outside of the US
If you reside outside of the United States you’ll want to check to see whether the online broker can accept your trades or not. Some brokers don’t allow certain countries to participate and in all cases there will be some paperwork required. Usually tax forms, a birth certificate and a passport are required to set up the registration.
5. Options and margin trading
You need to be careful when you are dealing with both of these types of trading. Make sure that you read all of the fine print carefully for margin accounts especially.
6. Products offered
Find out what products you will be able to trade through your account. Most online brokers use trading instruments like mutual funds, options, futures and stocks but you should make sure that the ones you want to use are available through your online broker. This is how to get started in the stock market with an Internet broker in the most efficient way.
7. Other costs
There can be a lot of hidden costs associated with using a broker online beyond the regular commissions. Some of these costs include asset transfer fees, fees for closing an account, fees for having an account that is inactive and annual maintenance fees. Find out exactly what you’ll have to pay before getting started with a broker.
A legitimate online broker will advertise that he is registered not only with exchanges but with a regulatory authority. You’ll also want to make sure that you’ll be sent a statement on a quarterly, monthly or weekly basis.
This is how to get started in the stock market. Get yourself acquainted with the subject and learn how to take your first small steps forward. In no time at all you’ll get the hang of trading like a pro and will start to build up a healthy portfolio of stocks. Over time these stocks will develop into a long-lasting form of security that both you and your family can use as a buffer in times of financial need or cash in for your retirement.