Day Trading Stock Tip - Questions To Ask An Online Trading Broker Part 1
Online Day Trading Brokers -- Questions To
Ask (Part 1)
If you are considering changing online day trading brokerage firms, or
simply
considering your first one, there are several questions you should ask.
These questions come from insiders who have worked at day
trading-oriented brokerage firms
and trading software vendors. Make
sure that you negotiate your expenses and terms up front and in
writing. Doing this will prevent problems down the road and minimize
any confusion.
Here are several questions you can ask your prospective brokerage firm,
and they appear in no particular order. While these are oriented for
stock trading, choose the applicable
questions for the instruments you will be trading.
- Are commissions given better pricing if you do a minimum number of shares per day? Per month?
- Are commissions given better pricing if you do a minimum number of trades ("tickets") per day? Per month?
- Does the brokerage firm "eat" (assume) any ECN fees which you have to pay?
- Does the brokerage firm offer ECN fee "rebates" if applicable for the route you choose?
- If the brokerage firm offers you ECN rebates, how frequently do they update your rebates?
- Do they offer "pass-through" charges when using an ECN which routes to another market center?
- If you trade low-dollar stocks, ask them what is the price at which stocks trading underneath that price are considered "cash" trades. If you sell those low-dollar stocks, will you get buying power returned to you that day or at a later date? Have them explain this to you.
- Do they offer you specific online trading software, or do you have a choice?
For more questions to ask a prospective online trading broker and help you make an educated decision, go to Part 2 of this article.
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