Know Your Broker Before Trading Online

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Proper investment strategies should always include researching your broker, but in today’s world of new technologies and online investment, what questions should you be asking?
Know Your Broker Before Trading Online
Proper investment strategies should always include researching your broker, but in today’s world of new technologies and online investment, what questions should you be asking?

The following are some key questions to ask your broker, which can save you both time and money:

* What tools are available from your broker? Stock quotes, news, charting, level II data and advanced order types are among many key tools for traders. Be sure your broker has the tools you specifically need.

* How fast are orders being executed? Keep in mind that online trading can significantly speed up the order process in comparison to placing orders over the phone.

For example, RushTrade offers Direct Access Trading, which allows you to direct your order to the execution venue of your choice. This can result in faster executions, improved price and greater control of your orders.

* Does your broker get paid for order flow? Some brokers may receive payments for sending orders to preferred market makers. This can lead to a conflict of interest. Make sure you know your broker’s policy.

* Do they offer a trading demo? Find out whether there is a cost involved for a trading demo. RushTrade, for instance, offers a demo of its Direct Access software free on its Web site.

* Is the Web site or trading software easy to use? Dealing with a slow or unwieldy site can really hamper your trade executions when speed is the name of the game.

* Can I trade after hours? Ask yourself whether this is important for your investing needs. RushTrade’s Direct Access software will allow after-hours trading.

* Are there any hidden fees? Brokers might tout low commissions but then hit you with unexpected fees. Look for brokers that do not charge low balance, inactivity or maintenance fees.

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Penny Stocks: From Little Pennies to Big Dollars?

There’s a lot of hype out there about penny stocks. Internet spam and flashy web sites claim that penny stocks turn your tiny investment into a big, big return. But are penny stocks all that they’re cracked up to be?

Many investors and brokers may claim that investing in penny stocks is a good way to start small and end big. Buying penny stocks means buying low-priced shares of small businesses and companies. Penny stocks are much less “liquid” than other types of stocks, as penny stocks have few shareholders. For some investors, an initial small investment in penny stocks can mean big returns later on.

But penny stocks are considered a high-risk investment. They trade infrequently, meaning that it may be difficult to sell penny stock when desired. There is a chance that, when investing in penny stocks, you will lose your entire investment. For some traders, this type of excitement and risk is simply the name of the game. Others prefer “safer” investments. But the final choice is yours. With penny stocks, can you turn little pennies into big dollars?

Of course it’s possible. With the stock market, anything is possible. Penny stocks are unique in that they are not traded on the big exchanges, rather over-the-counter. Investors who are interested in penny stocks can look for potential investments on Pink Sheets and like documents. Penny stocks are neither approved, nor disapproved, by the SEC. They are legal, but they are risky. They are small investments, for investors who want to make smaller, but potentially more dangerous, investments.

However, some of the claims about penny stocks are true. Shares in penny stocks are very affordably priced, and there is always the hope that this investment will in fact bring in big results. For those who want to get a taste of the stock market, penny stocks may be a good way to start. Learn more about penny stocks, and follow the progress of some penny stocks, to see if this is something you think you’d like to pursue. Don’t take someone else’s word for it, but track the progress of penny stocks for yourself. This is a great way to learn more about not just penny stocks, but the stock market in general. By learning all you can about penny stocks, you set yourself up for future success. The more you know about trading, the better you will probably be at it. If you do want to start with smaller investments, penny stocks can help you make it happen.

Talk with other investors, and your broker if you have one, to find out more about penny stocks. Speaking with other investors is a great way to have questions answers, as well as pick up valuable information and advice. The more your know, the more informed decisions you will make – and this will help you get that big return that you’re looking for. Can you get big dollars from little pennies? There’s only one way to find out.

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