HOW TO CHOOSE A DISCOUNT STOCK BROKER

One of the things that is very confusing for stock market beginners is how to choose an online discount stock broker. If you go to Google and search for them, there are dozens that come up. If you watch the television business news, you will see many of them advertise. How can you possibly know which one is right for you?

There are subtle differences between these discount stock brokers but for the beginner, most of these differences are not important. It is unlikely that you will ever need some of the services and differences that they offer, at least not for a while. Stock market beginners need to keep things simple which means finding an online broker that has a good, clean, easy to understand and navigate website as well as competitive prices.

You will be protected equally by law no matter which online stock broker you choose. Your accounts will be guaranteed up to $250,000.00 (just up from $100,000.00) and everything else that is basic will be virtually the same. You may find differences in prices as some offer trades as low as $4.95 while others may charge $9.95 or $12.95. Just because one online stock broker is cheaper doesn't mean it is any less reputable than another that charges more.

One thing to look out for is hidden fees. Stock market dummies as well as seasoned traders always need to read the fine print. Hidden fees and miscellaneous charges are tactics used by some of the discount stock brokers to raise their bottom line. Other differences may include things like being able to write checks from your account, short trading, and free trades if your order is not executed within a certain time period.

A big difference between each online discount stock broker is the website layout. Each company will of course use it's own software and some are more easy to understand and navigate than others. For instance, I love the E*Trade website as it is so easy to find your way around and find the information you need. The H&R Block website, on the other hand, seems archaic compared to E*Trade's and I always get irritated when I go on it as it will not allow me to easily find certain things. Unfortunately, you may not be able to fully test the website of a prospective stock broker before you open an account.

There is no right or wrong way of how to choose a discount stock broker. If you are a stock market beginner you will probably want to start with one of the better known ones who fall on this list:

TD Ameritrade
E*Trade
Scottrade
Charles Schwab
Zecco
First Trade
T. Rowe Price
ShareBuilder
Options Xpress