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Trading Pinksheet Stocks, Options and Equities

Stock brokers fall into two main types: discount brokers and full-service brokers.

Discount brokers do not offer financial advice to investors, but merely place orders for a set fee. Good discount brokers offer reliability and speed, as well as a low commission. Full-service brokers, by contrast, offer financial advice to clients, as well as a wider number of financial products. This requires them to have a broader set of skills.

Qualities

Good full-service brokers must share many of the same qualities as good financial advisers. A broker should keep apprised of financial news, including the health of individual companies and the market as a whole. A broker should also be able to measure risk and predict trends, as well as leveraging sound judgment and good math skills in making investments. Brokers may choose to specialize in a particular financial sector, or act as generalists.

Considerations

Some brokers are given far more latitude by their clients than others. In some cases, a broker may be given a certain amount of money by a client to invest at their discretion. In other cases, the client may simply ask the broker for advice or to supply research about certain companies. The best stock brokers are able to adapt to the needs of individual clients.

Online trading

Nearly all brokers offer online trading features. That’s great for those who feel comfortable with financial transactions over the Internet, but is it right for you? It’s wonderful to be able to access your account information at a moment’s notice, and to place trades 24 hours a day. We like the idea of using an online brokerage account, but we also realize that some people prefer to deal with a real person when they’re placing trades. Many discount brokers offer both options; in general, it’ll cost more to trade via a real live human being than to do so over the Internet.

When shopping around for an online discount broker, you should ask plenty of questions about its customer service department. Online brokerage accounts are becoming easier to use, and providing more and more information. Still, you need to know how you can access your account information if you can’t get online for some reason, yet still need to make a transaction. Will a “live” broker be accessible to you if you need to place a trade? What if you need a copy of your latest monthly statements for the IRS, and the web site is down?

If you’re comfortable with your computer and you don’t really need to hear that voice on the other end of the phone, we recommend that you go with a discount broker and trade online. If you need to hear a voice, the solution is simple: Choose a discount broker that offers telephone trading, too.

Warning

Although full-service brokers are supposed to act in the interests of their client, in most cases brokers are compensated, in part or in whole, on the basis of commissions. This pushes the broker to conduct trades, therefore influencing the advice he gives clients. The best brokers are able to work in the client’s best interests in spite of this payment structure.