Your Favourite Online Broker?

Ok..forget about all those old fashioned mail/phone brokers. Online is the way of the future.

So who's your favourite online broker and why? (Price, security, etc)

 

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I don't have one but you should tell me your favorite broker.

 

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Please read this before ever getting involved with trading stocks or bonds:

http://www.investopedia.com/university/bonds/

I use them and others depending on what they charge per trade. These discount brokers change their fees from time to time so you must always keep abreast of what's happening in their world of investing.

 

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Great link - Thanks. I don't have a favourite, but I'm looking. I used to do it the old fashioned way(Raymond James), but there are so many on the internet that I don't know where to start. Being Canadian also complicates things.

So far sharebuilder and e*trade look nice.

As for bonds...not enough danger

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My past experiences tell me that I could make a lot of money on the stock market if I traded more often.

 

And you can lose your entire worth very quickly in the stock market if your not very careful and very smart as to what's happening there.

 

I highly doubt online is the way of the future. All traditional brokerage firms now have an online trading business unit.

Personally, I hire a broker to do all my tradings. He makes all the decisions to buy and sell. There are two main reasons. Since he also handles hundreds of clients, he would buy stocks for everyone and the commission fee is split up between all his clients. I only have to pay a few cents per transaction and have a very diverse portfolio. Secondly. He is a professional who trades stocks for a living, and I am not. Every month I just give him my left over disposable income and let him do the dealings, and so far he outperforming the indexes.

It's the same as owning mutual fund, except you own individual stocks instead of a fund. Reputation of the broker is important. I got mine from referal.

 

I know the risks, and friends would tell you I'm actually a very cautious person (also managed to quadruple my money earlier this year

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)

EDIT::

Joeman,

I understand what you're saying, but I don't trust brokers, and my disposable income is too small to go low risk. Plus, I'm comfortable (and good) at reading the charts.

 

Unless you own your house free & clear or manage your own tax-deferred account, you shouldn't have a favorite broker. In the US you can earn 5% risk-free/capital-gains-tax-free/transaction-cost-free on every dollar you pay in extra principal on your house payment. That's much better than the average 7.5% risky (variable) rate the stock market provides before capital gains taxes and transaction costs significantly reduce it. Also, extra payments on the house require no research, no paperwork, and are as simple to make as writing out the monthly check for a higher amount (or, in my case, adjusting online the amount deducted from my account).

 

Within the UK, Banks have consistently outperformed the FTSE 100, if you're willing to invest long term, shares of the top banks (Especially Northern Rock considering their unique position within the UK Residential Lending Market) would be a good investment I believe.

 

Beware of ShareBuilder. It’s likely a subtle scam. Do they charge you the prices they paid, or do they buy stock at 10am, say, and then 50% of the times charge you the higher price to which it rose hours later 50% of the times? When they started business I asked them this, and they were evasive in their answers. They offer no way to confirm that they are not cheating. If you must buy stock (see my reply above), always buy it yourself at the market price. If the order takes more than 10 seconds to execute, you’re probably getting cheated on average. That’s because in 10 seconds the price has a 50% chance of going up. The broker can buy immediately and 50% of the times charge you the higher price 10 seconds later. The difference compounds over time, putting your long-term average gains significantly below those who bought & held an index fund with way less effort.

 

Wow. I appreciate all this concern over a youngster who could loose a whole bunch of money. but I'm convinced that this is the right decision

First, in response to your other thread, Zanket, I can't predict the future, but I'm very good at catching on to trends. As a kid I used to look through the paper, pick out 'my' stocks, based on the stats and current events, and watch their progress. I did the same with fantasy sports, and oft surprised my friends by picking the winning hockey teams. Obviously, I wasn't doing it for the money. And I did pretty well.

A few days ago I handed in some university applications. I was thinking of taking economics so that I could get paid a million $ to tell people what stocks to buy, but you know what? I'm not interested in learning complex, stupid formula's. My current strategy works fine as it is. and business is..boring

I did a real life experiment (couple hundred bucks) about one year ago with 'oilexco' I sold off my shares in october for a 400% profit. If I held onto them till now, I would've made a 1600% profit. I don't feel the slightest bit bad about this loss

 

House is the first place I would put my money in. If you don't have that much money, buy land. You can buy a lot for $25,000. If you can afford a new car, you can afford land.

If you have disposable income, I would recommend others to do what I did. I played around in stock market for several years and decided to give up. I was constantly underperforming the indexes. If you want high risk, you should join high risk mutual funds. There are lots of unregulated hedge funds out there that are getting insane returns from shorting stocks. Anyways, you really have to be very lucky to outperform people who trade stocks for a living.

 

Xerxes:
It sounds like you want to gambel with stocks. That is not bad but you should be aware that is what you are doing. Investing is something that is done over the long term and is based on financial analysis. Gambeling is trying to out guess the "unperdictable" movements of the market.

Scott Trade is a good low cost broker $7 per trade. I use "IB Broker" they charge a penny a share up to 500 shares. But they also charge a $10 per month maintenance fee.

For what it is worth I would recomend that you invest some of your money and gambel with only the amount that you feel comfortable losing.

 

That’s cool. We’re just giving info you can heed or not. You can’t go wrong having faith in yourself.

Catching onto trends is predicting the future. If you will excel as an investor, you should to be real clear about that. The Wall Street analysts making $1 million+ annually are the ones who correctly predict the trend at least 51% of the time. If you can so predict, nobody will care what complex formulas you know. If you can do it (after adjusting for risk--see below) get thyself to Wall Street pronto.

Excellent. Keep in mind that a portfolio that gains 10% can be better than a portfolio that gains 20% or even 400% in the same time period. That’s because the true measure of performance is not just gains (reward) but reward/risk; that is, reward divided by risk, also known as a risk-adjusted return. Again, if you will be a skillful investor, you must master this concept intuitively at least. If you are making 400% while I’m making 10%, chances are that you have a much higher chance of a reversal of fortune to, say, -90% than I do. You have greater risk that will be realized over the long haul. To tell who has the greatest odds of coming out ahead in the long run, we both figure out our reward/risk. The highest score wins. Look up the Sharpe Ratio on investopedia.com and Google for the info to calculate reward/risk.

A true story: A friend of mine thought himself a great investor. He would focus on a particular company and figure out the cyclical nature of its price changes. He got real good at buying low and selling high. His portfolio value went way up. Trading became a full-time job for him. Then one day he lost it all when MCI filed for bankruptcy. Moral of this story is of course: diversify.

Not trying to scare you. Just giving food for thought.

 

Only invest money that you can afford to lose in any non secured type of investment.

Only use 25 percent of every 100 dollars to invest in any one thing, always diversify your wealth so that your not caught losing everything if the market should fail

25 percent to stocks

25percent to real estate

25percent to CD's

25 percent to gold silver or platinum

As a general rule to think about.

 

I remember I had a teacher who traded options online and a bit of commodities
he used Ameritrade and said they did a good job for him but you should still check
up on em what trades have gone through the day

 

I support xerxes in his actions I wanna do more or less the same thing he is doing now
but i m very very lazy and need to get a job. I probably will open an account once i get 2 or 3 k and I have the same outlook. Its more fun to risk where you can gain a lot to have a 5% return on a bond. My personal interest has been options. I interned on the floor of the commodity exchange for about 5-6 months and the brokers do cheat their client a lot.... I really like the idea of writing insurance on stock or buying it with respect to where it will be in the future for thats what options are basicly.Insurance for a set ammount of time.

What do you do xerxes? anyways... Yes all those formulas are pretty useless in my mind. I took statistics and I completely disagree with some methods of estimation they are idiotic in my view and only look at the surface. Got a C- but thats my own fault my heart wasn't into the subject.

What screeners do you use? and reasearch sites? I m guessing you use
clearstation.com cause thats where most chart/trendists look. Almost
became one myself but couldnt figure out trending at all looked like bs
to me. I like msn.money screener that one is good and versitile.

 

You can't be serious?

Anyway, I realize that using a broker to make the trading decisions may be more suitable for some people. But the returns (and losses) differ dramatically. Many brokers are not that great, despite the amount of experience they may have (usually due to a sub-par attitude, or poor education). If you have found a successful broker, then I'd stick with them.

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However, for other people may be better off making their own decisions. I personally would not be comfortable with a broker making the decisions.

Where did you get this 7.5% figure from? If someone I knew told me they only got 7.5% return, then I also would tell them to look at other investments. 7.5% is pathetic, unless you have a rather large amount of money invested...

Again, where do you people come up with these rules? Some context and thought wouldn't go astray.

Keep in mind that true risk is impossible to quantify. Sure, if you are using high leverage, or trading extremely volatile markets, then your risk will be greater. However there isn't neccesarily a direct relationship between risk and return. I know some people (who are experienced, disciplined long term traders) who have made over 100% in 2003 - with ~low risk trades.

Xerxes - Its good to see you may have the right attitude (unlike most other people - this is why many people do not make money on the markets....). Making money on the stock market is all about attitude and discipline. With the right attitude, you will develop a valid trading plan, you will gain experience and success will follow. Obviously you cannot expect to be right all the time - many of the most profitable traders only have a win-loss ratio of around 40-60%. The key to making money in these cases is correct money management.

 

The 7.5% comes from the average since 1932 of the Dow Jones Industrial Average (DJIA, the “Dow”).

It’s easy to fool yourself into thinking a trading strategy is low-risk when it’s not. No amount of skill in money management is going to alleviate the mathematical risk in a portfolio. The “pros” will tell you they can do it because they make more money from you if you believe that. In actuality in the long run their investors (or you on your own) will highly likely experience the disadvantage of the higher risk, unless the money manager or you can also predict the future. The risk is given by the standard deviation of the natural logarithms of the portfolio’s value changes. True risk is very possible to quantify assuming no predictive capability. It's easy to calculate in a spreadsheet.

Example: If you invest in 100 or less stocks whereas I invest in 500 stocks, unless you can predict future price changes of your stocks the odds are millions to one that over several years your portfolio will have been more volatile (see-saw-y) than mine for no additional return. I had lower risk than you that if I needed the money my gains (the same gains as you got on average) were there rather than my portfolio being at a temporary downturn at that time. There is nothing you can do in the way of money management or discipline within your smaller portfolio to alleviate the greater risk you took.

 

What is the big risk with buy and hold? The risk of a market crash. That risk is too great for me. It takes years to make that money back, thus resulting in a weak 7.5% average return since 1932 (how much money could you have made from interest rates etc?). In 1987, the intelligent trend trader greatly lightened their positions, some even entered a few short positions - greatly reducing their loss (some even made a healthy profit). For obvious reasons, most of these people aren't too vocal about it (especially the more aggressive trend traders who made a large profit).