Options Trading: The First Step you Need to Take
Over the last few weeks, we’ve discussed most of the major ins-and-outs of options trading, the benefits, the leverage, and the simplicity.
We’ve also dispelled quite a few myths along the way, too.
As we move closer to discussing how to actually place a trade to buy to open, or even sell to close a basic put or call option, we must first discuss the fact you need a broker to do so. You also need permission to trade options as well.
While we can’t tell you which broker you should go with, what we can do is provide you with a list of potential ones to consider along with contact information for each. We can also detail what you should look for with each broker in order to make a well-informed choice of which to give your money to.
Some of the top brokers today, include:
- eTrade.com (etrade.com) – (800) 387-2331
- Tradestation (Tradestation.com) – (800) 808-9336
- Options House (OptionsHouse.com) – (877) 598-3190
- TD Ameritrade (TDAmeritrade.com) – (800) 454-9272
- Scottrade (Scottrade.com) – (800) 619-7283
- OptionsXpress (OptionsXpress.com) – (888) 280-8020
- Fidelity (Fidelity.com) – (800) 343-3548
- Interactive Brokers (InteractiveBrokers.com) – (877) 442-2757
- Charles Schwab (Schwab.com) – (800) 435-4000
With such a list, it’s important that you narrow down what may work best for you.
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The criteria for selecting your broker could include research into:
- Speed of order executions
- Ease of use
- Site security
- Customer support issues
First, as you choose your online broker, try not to get caught up in the glitz. One site may offer 50 first free trades. Another may offer commission free trades for three months.
While those are nice offers, it’s a marketing tool. Do your research first.
When it comes to commissions and fees, you are charged something on each and every transaction. Sometimes there are other fees for deposits and withdrawals, or extra fees for special orders. Be aware of all commission structures and applicable fees so you’re not being taken to the bank.
Speed of order execution is important, as well.
If you’re transaction isn’t placed quickly enough, it can negatively impact your trade. If not placed fast enough, it could very well impact if your trade is placed at all. The best brokers out there will place your trade as quickly as possibly, ensuring best trade possible.
Plus, always make sure your broker’s site is fast and responsive.
If the site has a tendency to move slowly, you may want to move on. The last thing you want to experience is a slow site that can lead to missing profit opportunities, or misplaced orders.
Make sure there’s ease of use.
The last thing you need to see is an unorganized mess that’s hard to navigate or understand.
Are security measures up to par?
Ask around, do your due diligence. Does your preferred online broker have a trustworthy site that can’t be hacked? Identify and ask questions to see what security measures are in place.
The last thing any of us need to do is lose money, especially to a hacked site.
Make sure the site has a good reputation.
Some of the best online brokers – as mentioned above – have great track records for high quality servicing to customers. Stick to what’s well known and used often, and you can sleep better at night. We mentioned those sites above to help make your decision-making process a bit easier, too. They have some of the highest qualities.
Consider the knowledge and level of customer support. We’ve all been through poor customer support issues before. And as always – it’s inexcusable. If you get some one on the line that has no idea was a limit order is for example, move on. If you get a guy on the line that’s rude or places you on hold without a care in the world, move on. It’s your money at stake.
Most of all make sure that you are comfortable with the choice you’ve made.
Moving forward, we can discuss how to apply to trade options, and how to take the first steps towards placing your first trade.
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