Selecting the best stock broker is as difficult as making efforts to buy the best share in the given conditions of the market. You have high expectations from the individual upon whom you are going to place your money in trust. The first meeting with such a broker, is exploratory. You come to know and decide what the mutual expectations are.
In brief, the choice of a broker for an investor is inevitable. Analysis of company balance sheets is the job of the experts, due to the sheer number of the companies whose shares are listed in the exchange. Forex is another area that tempts an investor which needs expertise. A broker owns the major responsibility for your success in the trading of the shares-both buying and selling. A broker is careful about the reputation of his firm, and would not like to deliberately misguide an investor. There are exceptions to this rule. Profit-making is such a driving force, and at times a particular broker may make extra efforts to push the stocks of a marked company.
Though brokers are credited with managing the portfolio of an investor well, one needs to take care of the fundamental aspects while engaging a broker. Some of the issues on which an investor cannot afford to relax the guard, before being judgmental about fixing the responsibility of successes are:
- To do the trade, a broker needs to qualify in two tough tests, by the prescribed authority. Verify his credentials.
- Stock Broker, generally acts on your instructions, unless you have given him the freedom to act which is supposed to be in your best interests.
- The dual activities of buying and selling involve his commission. Thus, in every trade, you are losing something in terms of his flat fees. See that the commission charged by your broker is reasonable and get this in writing before you engage the services. Ensure that there are no hidden costs involved in the transactions.
- Before you discuss your plans with the broker that you intend to appoint, be sure about yourself. Map your plans. What is your investment purpose? Is it short term to acquire an asset like a car or a long-term goal for your retirement? Are you willing to take risks? A clearly thought-out financial plan is the key to successful investments.
- In share market, risk and return go hand in hand. Judge the temperament of your broker if you decide to give him the free hand. In the chase for high returns the risk of capital loss is not ruled out.
- Be not in a hurry to give your decision on the so-called attractive recommendations of the broker. Think coolly and take your time to agree or disagree. When the market is volatile take extra care.
- Assets have their cycles. Whether your broker has the good grasp of the economic trends that affect the market as a whole?
- In uptown and downtown of the economy, the first to be affected are the stocks. Is your broker can ably interpret the overall impact and take care of your portfolio accordingly? Can he anticipate the issues?
A share broker has responsibilities for your success, but that is not the final verdict. It is your investment, and you need to be on the guard. No stock broker has ever reimbursed the capital loss of his client. Share market is neither your friend nor that of your share broker. Remember, trend is your friend, and guard every trade with stop losses.