A premium broker is a service offered by financial brokers that provides extra investments services above and beyond standard stock trading. Some of these include no-commission trading of US stocks on any new purchase or allowing for shorting of individual company shares. Other benefits of using a premium broker are no account minimums, low fees, and flexible transfer procedures.
A premium broker can be an online web application, which usually only allows buying and selling stocks through them, or it can act as an offshoot to an existing brokerage firm. It’s imperative to consider that this type of investment needs to be executed within the United States to qualify for commission-free trades.
Do your research
Before signing up with any online broker, make sure to check out reviews of the service they provide. Using brokerage services can be costly if not done carefully, so it’s essential to do some background checks on what type of fees there are and how you can avoid them.
Compare fees for different brokers
Fees are one way that online brokers will try to get traders to focus on them– but at the end of the day, pick a service based on its features and benefits rather than which company charges less in commissions. It’s also important to consider how much information you’ll need about stocks you’re interested in before picking an online broker. If you plan to research each stock purchase extensively, there’s no need to pick a broker with extra services. If you plan on sticking solely to large US companies, perhaps the commission-free trades wouldn’t be worth it for you.
Also Read:
No account minimums
To open an account, you will need a minimum number of assets to start trading a particular type of instrument. Ensure that the online brokerage company has no or low minimum requirements before signing up with them to avoid being charged unnecessary fees just for trying out their platform.
Transferring stock
When using a premium broker, they can sometimes have stringent transfer procedures when moving money from one type of investment account into another. It’s often best to find one with automatic transfer capabilities to move stock around quickly.
Being charged for not trading
Although brokerage fees are usually apparent, what isn’t typically transparent is how much it’ll cost if no trades are made within a certain period. For example, some brokers charge monthly service fees even if the account hasn’t gained any assets over the month. Make sure to check with your broker ahead of time to see how they handle dormant accounts so that you won’t get hit by any nasty surprises. You can see here what Saxo will charge.
Commissions on margin-trading purchases
Some online brokers allow customers to buy stocks on margin, which means buying more stock than you have assets for by borrowing them from your broker at an interest rate. Make sure to check with your broker if there is an additional fee on these types of transactions, as they will cut into your profit margins and can result in huge losses if not handled carefully.
Also Read:
Investment Center Review 2021- Why I Switched To This Online Trading Platform?
Limit access to account
If you plan on trading on margin, make sure that the online brokerage account only has limited access for day-trading purposes or any other type of investment that requires frequent monitoring of stock prices. If the company doesn’t limit this usage, it could end up costing you far more than intended!
Check customer service reviews
After doing all your research about which online brokerage would be best for you, it’s always a good idea to double-check some third-party reviews of the company. Sites like the Better Business Bureau are good to start with, but always remember that no one experience is universal!
Check for early account closure fees
Some online brokerages will charge traders extra fees if they close their accounts within a few months after opening them. Before signing up with any broker, double-check what this fee would be if you plan to close your account shortly after starting it.
Don’t hand over assets
Enjoying commission-free trades might sound great at first glance, but make sure not to give away too much control over your assets to an online brokerage service unless you’re confident about their capabilities. If you don’t trust them with your assets and don’t give you commission-free trades, consider looking elsewhere.
