How to Select an Online Brokerage FirmIt is VERY important to understand that if you follow TimingTruth's investment strategy then your requirements of an online broker are very minimal. This is a result of our desire to simplify the entire process. Most of the online reviews ranking brokers focus on the traditional requirements. If you participate in traditional investing then these reviews are valid and useful. If you use our strategy then they are not. These are the criteria we use for selecting an online broker given in order of importance. - Safety first - Brokers do go bankrupt, like banks and insurance companies! It is imperative that the online broker be a member of SIPC and FINRA .
- Selection of services - The broker must be able to deliver the investments and tools you need. You need these:
- Availability to trade ETFs
- Online account management so you can see what your investments are doing
- For some the ability to establish margin accounts and execute short trades
- The ability to transfer money to and from your other financial institutions is convenient.
- The ability to download transactions into your personal finance tool (like Quicken) is nice
- Total Cost - Not just the cost of a trade but the actual cost of using the broker.
- There should be NO annual or monthly fees
- Look for the lowest fee for trading ETFs (it is usually traded and priced like a stock)
- Look for fees on things like bank transfers or other normal actions.
Our strategies demand very little of a broker and because of that most any broker will work just fine if they meet the above three criteria. Here are the brokerage capabilities you DO NOT need. - You will be trading very seldom so discounts for a lot of trades will be of no value to you.
- You do not need any of the analytic tools so often touted by brokerage firms.
- You do not need a Full Service broker or any of the related items
We personally use and recommend Vanguard.com, TradeKing.com and Zecco.com because they meet the above needs and are cost-effective.
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