Online trading in stocks and shares has opened up a whole new world of business opportunities both for the common investor and the stockbroker. Since online trading or brokerage do not require huge investments in terms of man power and office paraphernalia, numerous brokerage firms have mushroomed all over the world. All that a stockbroker needs to start his brokerage firm is a license, which can be obtained by passing two licensing examinations, a computer, and an Internet connection. The question arises whether you should open a trading account with any of the brokerage firms you come across on the Internet. Would it not be like getting into the clinic of a doctor who has obtained a medical degree and pitched a nameplate on the gate?
Since you are entrusting your hard earned money and your financial future in the custody of a stock broker, you must find out what qualities should your broker have besides the official trading license and a website.
The first important feature of an ideal stock brokerage firm should be its website. The website should be simple, professional and informative. It should provide details about how the brokerage firm delivers more in terms of customer services and benefits.
The website should devote sufficient space to educating the customers, both the novices and the experienced, about the whole process of making money through trading in stocks and shares. The education section of the website should start with the most elementary information required for an absolute beginner. It should enlighten him about what is a stock, how it is traded, what risks are involved in stock trading, how the trader can secure himself against such risks, what are the stock trading tools and how the trader can use them to his advantage.
Like every other field of knowledge, stock trading has its own special vocabulary with which a person needs to be familiar in order to understand the stock market and the concept of trading. The website should explain the stock trading jargon through a glossary of technical terms. There are words like ‘chickens’, ‘bulls’, ‘bears’ arbitrage, ‘short’,’long’, ‘ stop loss,’ resistance levels’, ‘floor/bottom,’ ‘ceiling,’ demand and supply’ and so on which need to be understood.
The website of an ideal stock brokerage firm should provide and explain the use of stock trading tools like stock news, historical stock charts, real-time streaming watch lists, customizable stock screening and back testing platform and advanced technical stock charting platform. In short, the stock brokerage firm should enable both the newbies and the veterans to derive the maximum benefit from it. The website should train a rookie to be a professional stock trader. Creating a kind of simulated stock trading platform or a hypothetical portfolio that allows the novices to learn the tricks of trade can do this. The web site should explain the possible pitfalls in stock trading and how they can be avoided. It should train the customer to judiciously use the combination of stocks and ETFs to make risk free and profitable investments in the stock market. The customer should be educated to view historical performance and historical charts.
An ideal brokerage firm should provide a platform to meet the individual needs of a long-term investor, the active trader or a professional trader.
The stock broker should provide a web-based trading platform featuring a trading center with real time quotes and charts, daily, weekly or monthly scheduled investment services, streaming watch lists, free dividend investment possibilities, free ACH electronic deposits and withdrawals accessible behind any firewall.
There are numerous other technical features that a new entrant to the stock market trading should understand and use. The website should provide downloadable trading application platform with features like streaming L1 quotes, customizable real time charts with technical indicators, extended-hours trading, customizable platform interface, time and sales data and so on.
An ideal stockbroker should provide customizable scheduled investment tools that allow the investor to build a satisfying portfolio over a period of time and save it for the future. With such customizable tools, an investor can create a custom portfolio of stocks, specify an investment amount and schedule the account automatically.
With huge amounts of customer money held in its trust, the brokerage firm should provide tools for protection against the possible frauds through the arrangement of some kind of reliable insurance for a sizeable amount.