Find a Cheap Online Stock Broker - Compare Brokers First

It is important to take the time to do a good comparison when you are selecting your online stock broker. You should look at the category of discount brokers, which includes the cheap stock brokers who specialize in offering an online trading platform for individual traders. The big names in this category are also known for providing a quality service to their clients.
Beginning traders are often interested in finding an online broker with low trading costs. They want to pay low commissions and may not want to make a large initial deposit into their account. This is a good strategy for starting out for many reasons.
Whether you are a beginning or a more experienced trader, keeping your costs down is very important. Every dollar that you pay your stock broker in commissions and fees is one less dollar that you take home in profit. Unless you have proven to yourself that you can consistently turn out profitable trades, you may be cautious and want to start with a cheap online broker.
Using a cheap stock broker will give you the most flexibility in your trading. You can place smaller trades of just a few hundred dollars and your commission will cost you much less on a percentage basis. You can also trade more often, or cycle your trades quickly without having to worry about paying too much in commissions.
You may think that all online brokers are about the same when it comes to their commissions, but that is definitely not the case.
First, stock brokers have quite a variety of cost structures and you have to understand how each one will impact you for the kind of trading you are planning. Second, there is a definite cumulative effect that makes small differences in commissions per trade really add up.
For example, compare two cheap stock brokers. Broker A has a flat rate commission of $9.95 per trade. Broker B has a flat rate commission of $4.50. That is only a difference of $5.45 per trade, right? But remember when you buy a stock, you pay one commission and when you go to sell that stock you will pay a second commission. So now the difference is $10.90 per stock. Let's say that you actively trade over the course of a month and you buy and sell 15 stocks. You will pay $163.50 less in commissions for the cheap stock broker during the month. Over 3 months, that is $490.50 difference in commissions alone. That is nearly $500 in your profit over the course of one quarter that you are paying to your stock broker. So a little definitely adds up.