Choose Broker-company Correctly, If You Want To Have Positive Results.
What broker companies do clients prefer? Today there are three basic types of the broker companies:
1. Full-service brokers.
These are the companies giving a full complex of services: from simple broker operations to the organization of the repayment of certain share holdings at emitters and their placing among investors. Such companies have popularity and reputation; there work hundreds and thousand professionals. As an example it is possible to result Charles Schwab, Merrill Lynch, Credit Suisse First Boston, Bear Sterns, Lehman Brothers, Goldman Sachs, Morgan Stanley Dean Witter. However, cost of “investment councils” and broker services of such companies is high, and can make 0,5-1,5 % from a sum of transaction. Such level of commission fee suits corporate clients and large investors, however it is absolutely unacceptable for the usual investors having actives from 5 to 100 thousand US dollars.
2. Discount-brokers.
These are the companies offering low level of commission fee for clients, independently making investment decisions. Thus functions of such company are execution of orders and granting of analytical materials. With the advent of the Internet such services began to be given and through global computer networks that has accelerated execution of operations and has even more lowered their cost price. Examples of such broker companies are E-Trade, Datek, Ameritrade. Considering popularity of these services among private investors, the large broker companies also have expanded sphere of the business at the expense of the organization of Internet broker divisions.
Thus, Internet brokers thanks to “democratic character”, that is the low commissions, low requirements to the starting deposit, simplicity of use of a site and other advantages – most in the best way approach for ordinary investors.
3. Systems of direct access.
Basically, it is divisions of discount brokers, who give more powerful tool of an exit on the market to the private investor, through so-called Electronic Communication Networks (ECNs). They represent the electronic markets on which there are commissions on purchase and sale of safety stocks, and in case of coincidence of demands there is a transaction. These systems were recently accessible only to professionals. As a result of change of the legislation in sphere of regulation of the share market of the USA, simple investors also have acquired the right to use these systems. Advantages of these systems are speed of fulfillment of operations and possibility to get access to the market at level of service of 2 systems Nasdaq, and doubtless minuses are necessity to have the allocated Internet line, to load the special program equipment, using which is possible only after a special curriculum, high starting level at account opening – usually 25000 dollars, and also necessity to make huge number of operations daily. Because in systems ECN it is impossible to make bargain with a number of the actions, it cannot be received quotations under some securities through ECN. Moreover, the current quotations presented in systems ECN, reflect only operations of participants of the auctions of concrete systems ECN, and can not reflect the best price of purchase or the sale, existing on this moment in the market as a whole.
Before you make up your mind to make a forex investment or start forex trading yourself, better find a good forex book and learn more about the currency exchange market – this will save you from tons of troubles and traps.
Tags: currency trading, forex
