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If you are interested in investing in the stock market, you must go through the difficult question: which brokerage should I work with? As any investor knows, the choice of your broker can be as important as the investment itself.

Let’s see what are the variables that we must analyze before choosing a stock broker!

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Let’s first see what the functions of a broker are: the stock broker is the one who will take and execute your purchase and sale orders for securities (shares, for example), and will also act as an intermediary between the buyer and seller.
The compensation of the broker you choose will depend on the fees charged for executing the orders. This means that the greater the volume of the transactions executed by him, the higher his remuneration, and therefore there is the possibility that some brokers suggest you buy shares that are not in your best interest. It is these brokers that you must identify and avoid.

Brokers are also called financial advisers, investment consultants, or financial consultants, and they usually work for a brokerage company. Brokers usually charge commissions for the amounts involved in the operation, as well as fees for each time the stock is bought or sold. A high commission implies that, every time you buy a share, you must wait to get rid of it that it rises, at least, above this commission.

Commissions

Currently, the commission, outside of VAT and Stock Market charges, is in a range that reaches up to 0.5%. From there, it can be said that the service is expensive, although sometimes it may be worth paying a little more for a consulting service of the highest level. Before hiring, check what is the commission scheme that a broker handles, as well as the values.

Some brokers that charge a fixed amount, which is related to the amount of the operations you make in the market. In addition, some brokerages handle the variable collection modality, in which the broker-dealer charges a certain percentage depending on the amount traded, whose market ceiling is also between 0.4% and 0.5%, for each purchase transaction of actions. For their part, some brokers that operate over the internet have a fixed cost for each movement (up to a certain amount), which starts at $ 10,000 for each transaction.

There are other charges, such as custody of share titles. These are charged separately, although they have a marginal incidence. For this reason, evaluate well how you want to operate on the stock market, since for low amounts, a variable commission may be a good option.

Execution of orders

In the Stock Market, the outcome of a successful transaction always depends on its being carried out at the right time. If your broker is late in making the buy or sell orders effective, you will be left with the feeling that you did not manage to take advantage of the exact moment when the transaction would have paid you better dividends. You must be clear that brokers execute these mandates in order of receipt, regardless of the size or type of investor. So, find out with the broker directly how long it takes to execute the orders, if it is automatic or not and until what time these orders are received. This information can be of great help to you, since when trading with a broker, the concept of opportunity is extremely relevant.

Do you have your own portfolio?

This is a point that one does not always weigh when hiring a stockbroker. The risk of a broker with its own portfolio, the portfolio of assets where the same firm invests, is that conflicts of interest may arise with its clients. Brokers often hide the fact that they have their own portfolio, so you have to be careful.

Conclusion

These are the main variables that you should consider when choosing a stock broker. To make an informed decision, we also recommend that you read other articles that discuss how to choose a stock broker.

You can support us by downloading this article as PDF from the Link below. Download the guide as PDF