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Should You Use An Online Broker?
by David Rattiner
David Rattiner is a business writer for

Broker Vs. Broker
By David Lion Rattiner

A lot of people ask me if they should trade stocks online or if they should get a personal stockbroker to do it for them. My answer always depends on the type of person that is asking me.

Having a personal stockbroker has its value and using an online broker like has its value as well. Knowing what your needs are and how much time you are willing to commit to your portfolio are the real questions you need to ask yourself before you ditch your stockbroker and go completely online.

First and foremost, you have to ask yourself if you have the skill and confidence to trade stocks on your own. It’s true, buying and selling stock on the Internet is incredibly easy, but managing a portfolio and selecting stocks that make sense is never easy.

Most people start out trading stock through a stockbroker, primarily because they are intimidated by the idea of buying a stock on their own and want a broker to hold their hand. There is nothing wrong with this, and in a very short amount of time, especially when your own money is at stake, new investors develop a quick understanding of the market because, well, they want to know what the heck is going on with their money and they don’t want to lose it.

If you are reading this article, I can assume that you have already one through the growing process of understanding the stock market, its value as a money making institution and what strategies that you feel comfortable with. Without a doubt, if you have a basic understanding of the economy and the stock market, a portion of your portfolio should be transferred to an online account. They are all good, I recommend because that is what I use, but I have plenty of colleagues who use and I like because it has excellent research tools and is cheaper then, which also has an excellent customer service line and research tools, but is about double the cost per trade.

If you rely on your broker for guidance, and he has been steering you in a good direction so far, it is not wise to ditch he or she completely. Getting a tip from a broker with a background in finance and who studies the market all day is a lot better then taking a tip from your buddy who thinks you should buy Rimm because he thinks Blackberry’s are sweet. A broker is excellent to bounce ideas off of, and if you have a good one, you’ll get an honest opinion on your idea. Brokers work on a commission basis, but these days, it generally has to do with how much money you have with them and not how many trades you execute, so few have an incentive to give you nothing else other then their true opinion.

Regardless, online trading is fundamentally less expensive, interesting and gives you more control and focuses you more on your money, so explore it and get an account. You might find yourself making more money online then through your broker.

Published: Sep 9,2008 16:59
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