Online Stock Brokers and Discount Online Brokers
The level of fees depends on the level of service!
You have a choice of online stock brokers or full-service brokers when buying and selling shares. If all you want to do is to buy or sell, then online trading brokers are the easiest and cheapest way to go.
If however you are uncertain as to the appropriate course of action and you need to seek advice about the purchase or sale of a stock, then a full-service broker would be the way to go. You then pay extra for the service.
For investors interested in options trading, an online options broker may be a more appropriate choice; or for futures trading, an online stock broker futures trading, assuming these services are not available from a regular online broker.
Online stock brokers don’t normally provide advice or share market tips. However, they may provide summaries of advice on their website from a variety of analysts.
This is usually in the form of forecasts of future earnings, or summaries of reports from well-known stock-market advisers and analysts.
Take Care With Analyst's Forecasts
Keep in mind that analysts’ forecasts need to be considered in tandem with the earnings stability of the company in question.
Earnings stability is a financial measure that is available on my online broker's website, but can be accessed elsewhere by following the link above.
The less stable the earnings over time, the less reliable the analysts’ forecasts are likely to be.
That is why it is recommended to focus on companies whose earnings stability is greater than 75%, or certainly greater than the sector and market average.
But also keep in mind that the market may more accurately price these companies due to greater predictability of earnings. This is more likely for larger companies than for smaller ones where there is less analyst activity.
Services of Online Stock Brokers
Services provided when you buy stocks online include placing buy and sell orders and providing a daily stock market quote. This normally occurs during stock market trading hours that commonly range from 10am to 4pm depending on whether daylight saving is operating.
Discount online brokers may be more relevant to day traders who are looking for low cost stock trading as they make many more buy and sell decisions compared to an investor following a value investing approach.
Online-broker sites may also provide information on company announcements that are extremely useful as they appear daily, and quite often before they get into the newspapers.
This includes information on changes in holdings by directors and information on major initiatives and take-overs that the company is involved in.
Online brokers also provide live stock market feeds of stock prices and a free stock market charting program.
So one way to rate online brokers is in terms of the services they provide. Another way is to search for online broker reviews to find the best online stock brokers for your needs.
If you are looking for the cheapest online trading, be careful that you will receive all the relevant information that a value investor needs. Cheap online trading may come at a price!
Full-service stock brokers provide tips on investing through supplying clients with reports on companies that they have researched or that they have bought from research companies. They also do the buying and selling for you.
As a result they charge more than other brokers who do not make purchasing suggestions. If you wish to minimize costs, like I do, consider other sources of advice and use online stock brokers.
Sometimes you can get access to full-service brokers’ recent recommendations from newspapers. It is good practice to carry out an analysis on these recommendations rather than accepting the advice as gospel.
I find that I can obtain a wealth of information on companies, including company announcements and important historical and prospective financial data from my online-broker's website.
As well, historical price information can be obtained in graphical form. Important financial ratios and forecasts from analysts are also available.
In fact, I can garner sufficient information to get most of what I need to be able to comfortably operate in a value investing mode. And the price of membership to the website is - ZERO!
The benefit to you in checking company announcements and financial data from online stock brokers' websites is that you will become much better informed, and hence a better value investor.
The related articles below examine the importance of each topic in more detail.
Related ArticlesPlacing stock market orders
- requires knowledge of some particular terms. Check them out here to make sure you know what they are.
Earnings stability - is an important measure that needs to be considered in conjunction with analysts forecasts on online stock brokers websites.
Stock exchanges - provide a wide range of interesting stock market information that is often overlooked by value investors. Worth a closer look at your stock exchange website?
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