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The Discount Futures Broker and the Regular Futures Broker

The discount futures broker is a relative newcomer to the financial trading scene. He came along in the early 1990s, when computers were on the march into more and more homes and offices, and were beginning to be linked together through the internet. Information technology was in the ascendant, and everyone had access to as much information as they wanted at the click of a mouse button, so it was going to be easy for us to use that development to trade successfully on the futures markets. Or was it?

Could the discount futures broker really help the average newcomer to financial trading make money on the stock market – something that the regular futures broker had been doing for many years? Let’s see . . .

The typical level of service provided by a discount broker is the old “execution only” advice, which was the cheapest option provided by regular brokers to clients who could not or would not pay the price of their higher level services.

With all the information easily available through the internet, and access to the stock market through the broker’s trading platform, the ordinary person could take a position on the future trend of the price in any stock or commodity, and trade accordingly.

This development, though giving us the freedom to try and increase our wealth through financial trading, invited people who could not afford to lose money, to place themselves in a position where they were in grave danger of doing just that. And in too many cases, lose money they did.

Contrast that with the situation before discount brokers came along. Regular brokers offered a range of services, depending on what the client could afford. At the top end the client’s portfolio was traded direct by the broker as if it were his own. At the bottom end the broker provided advice only when asked for it by the client.

Whatever level of service the client chose, the broker was always there with advice and information. Standards of service were generally high, and as a result clients enjoyed a much higher level of success than, generally speaking, they do now.

It was always treated strictly as a business, where the typical objectives were security of the client’s money in non-risky investments that would yield a reasonable return, with perhaps sometimes a small part of the portfolio placed in a higher-risk market with the potential for greater returns.

Now, with thousands of self-styled financial traders having come onto the scene (and frequently left it before long, poorer rather than richer) with a get-rich-quick mentality, risks are commonly taken that never would have been if the broker had been there to guide the way with a stock market trading strategy.

The truth is that the higher the level of service the client gets from his broker, the more likely he is to survive in the marketplace, and in most cases obtain steady, if not spectacular, returns on his capital. The regular futures broker comes in way ahead of the discount futures broker. The fees that have to be paid for this higher level of success are well worth it. If the newcomer to financial trading cannot afford to pay fees for advice from his futures broker, or for guidance from a recognised successful financial trader, then he really should wait until he can, and not throw his money away.

You can find your recognised successful financial trader on our home page. Just  complete the form for your free mp3 interview with Vince Stanzione, Secrets of Successful Trading.

Philip Gegan

Discount Online Trading – Making A Success Of It

Discount online trading has become so popular that it almost dwarfs everything else on the financial markets. It has brought the concept of trading on the stock market to the masses.

And that’s actually the problem. We all know how it happened – computer technology, the internet, automation, and so on. But when you cause complex and potentially risky activities to fall within the grasp of the masses then the outcome is usually far from happy.

So instead of having a new class of successful, wealthy stock market traders and investors, using all the information available via the internet to make mostly successful trades with minimal brokerage fees, we have a new generation of online financial traders who are at best struggling to make any decent profits. Why should this be?

It’s not that there is insufficient information. The internet is awash with it, though regrettably much of it is misleading and sales oriented. The problem lies in finding reliable information and genuine help. Both of these commodities, generally speaking, were available before the internet and discount trading came along. The full service accounts that are still available (at a price) at most stock brokers, online and offline, provided help and advice for newcomers and old hands alike. The chances of successful trading were therefore much higher.

Now the average new trader finds himself alone and often confused, in a business that uses unfamiliar terms and practices, and in markets the behaviour of which seem strange and often illogical. To make things worse, he is often using more of his available capital than he should on each trade, and is finding that trading online can be addictive, risky and close to pure gambling.

In order to succeed in online trading whilst using discounted services you must disassociate yourself from the “herd mentality”. Most new traders see the opportunity presented to them not as a business but as the chance to get-rich-quick (or get-out-of-debt-quick). They’re encouraged in this attitude by the mass of sales pages selling information and software to do with trading the financial markets, especially forex, the graveyard of many hopes of online riches.

You, however, must see it strictly as a business with which to make regular profits. You won’t succeed with every trade you make, but you can take steps to ensure that you succeed in more than half and that every profitable trade more than wipes out the losses of several losing trades.

Investing in your online trading education is essential. But you have to discriminate in the type of information you act on. Learn where the most reliable information is. Experiment with demo accounts, where you can practise trading without risking real money. Take advantage of the discounted fees of your broker by investing in a reliable stock trading package such as Sharescope.

Finally, find a mentor – someone who actually trades the markets himself, rather than just sells information on how other people can do it. He will have been where you are and taken the hard knocks already. He can short-circuit the learning process for you, and you may even be able to simply copy his trades to start off with. The internet and your computer put the world at your fingertips, so make use of that power to succeed in your online trading career.

Just go to our home page and complete the form for your Secrets of Successful Trading.

Philip Gegan

Discount Futures Brokers and the “Rolling Revolution”

Discount futures brokers have been around since the late 1990s. They’ve been part of a kind of “rolling revolution” in financial trading. The trouble is, this “revolution”, though beneficial to traders and investors in many ways, has encouraged cut-priced (or discounted) services with not just a reduced level of service but also a lower level of professionalism.

The futures market has existed for many years, but these recent changes mean that in place of the traditional investor, investing for the medium to long term, we now have the “trader”, who is looking for quick profits over a period of a few months at most, and often only days.

And what these traders trade is in most cases not the traditional shares or company stock, but options to buy the stock, or the future price of the stock (“futures”), which means no real attachment to the company concerned. They have no interest in its affairs other than how they affect the share price, no concern for the workforce, they’ll never attend the annual meeting to discuss and vote on the future direction of the company, and they’ll hold no stock certificate signed by the company secretary certifying the holder to be the owner of so many shares in the company. And the company may just as easily be based somewhere on the other side of the world as in the trader’s own country.

The internet’s to blame. It has enabled ordinary people to trade in this way, and at a discount, i.e. for cheaper brokerage fees than had been the case previously. Advances in computer capabilities and speed bred impressive advances in software applications. Stock brokers invested in this as they saw the profit potential, and most of them began offering discounted services and promoting themselves as, among other things, discount futures brokers.

The trading platforms that enable you to make your trades instantly without speaking with another human being, the charts and their indicators, giving price histories going back to way back when on thousands of stocks, these are all the result of that massive investment. And they now enable brokers to attract far more business than before by using the increased automation produced by their advanced software programs to offer cut price services.

And while futures are now all the rage, the traditional role of the futures broker has all but disappeared. Brokers have re-invented themselves. The typical transaction now no longer involves the broker advising his client on how he sees the future of a particular market or how the client ought to consider spreading his risk. Even more in decline are pro-active services where the broker actively suggests investments and trades, or even takes over the client’s portfolio to trade as if it were his own. Only the more wealthy even consider paying for these kind of services.

Now what used to be called “execution only” services are king. The broker simply provides access to the information the trader needs in order to make trading decisions, often by technical analysis. More astute traders rely instead on independently obtained data. Real brokerage services have been taken over by “dealers” who make calls to customers to offer help and, more to the point, make sure they are making enough trades and incurring a decent level of brokerage fees.

There are brokers who are straightforward about their fees, and there are others who are more evasive. If you’re opening an account for the first time, or switching your account to another brokerage, then you need to check the fee structure before you sign up. Watch out for hidden fees.

With each broker you consider, ask what their all inclusive “round-turn” rates are. Ask what your transaction costs will be, including any “hidden” fees. If you’re a regular trader then you’re in a position to negotiate fees rather than tamely accept the quoted minimum fees.

By protecting yourself from excessive fees, even from the new breed of discount futures brokers, you can at least more easily profit from the brave new financial trading environment.

And with the right guidance you can make really serious profits.

Just go to our home page and complete the form for your Secrets of Successful Trading.

Philip Gegan

Discount Commodity Brokers – What Exactly Are They?

Discount commodity brokers are often the same people as regular commodity brokers. It’s just that they offer a discounted service, often alongside their regular service. They’ve come into their own since the internet brought the trading of commodities, within the reach of potentially millions of people. Before then commodity trading tended to be only available to the more wealthy sections of society, or those with the time and disposition to engage with stock brokers.

Now, you can do everything online, and you don’t have to keep up to date through magazines and newspapers, themselves often out of date in financial trading matters before they reach you. And you have up to the minute (or almost) information online 24 hours a day (especially if you subscribe to a financial trading information service such as Sharescope), so you don’t need all the services that commodity brokers have traditionally provided.

In fact most online traders with a brokerage account decide they can do without this completely. There has thus come about a discounted service, or stripped down version of what had been the traditional brokerage account.

The discounted service is basically the same as the regular service, but without the individual attention and advice you would normally get. So if you opt for a discount service you will be able to trade using the broker’s site and facilities, such as charts, trading platform, and so on, but won’t be able to call on the broker for advice on a proposed trade, nor will the broker be pro-active in suggesting trades, as often happens with a standard account.

The advantage to traders of a discount service is, of course, that it’s cheaper. The majority of newcomers to financial trading via the internet wouldn’t have the money or resources to trade in any other way, and so they are happy not to have the advice, which they believe they can obtain free or cheaper elsewhere online, and to pay a lower set of fees.

And it’s because of the internet and advances in computer technology that brokers are able to offer these discounted services at low prices. The automation that web-based applications enable free up staff and reduce the running costs of a brokerage. So, as they say, it’s “win-win”.

Deep discount commodity brokers have taken this business model even further by offering an even cheaper type of account in which all they do is accept and execute orders. There’s no advice or customer service to speak of, and only a basic web-based trading platform. But there is still everything a trader needs to simply make one trade at a time, so it is a very popular type of account.

Another advantage of a discount commodity broker is that he will usually accept a lower initial deposit in order to open an account. This can often be as low as $2,500 – substantially lower than the amount required to open a traditional account. This has in turn helped to increase the popularity of this type of account and discount stock trading in general.

Find out more about online financial trading and how you can make good profits from it very easily by filling in the form on our home page and clicking on Submit.

Philip Gegan

Discount Stock Trading – What To Look For In A Broker

If you’re new to online financial trading then you’ll probably be looking at opening a discount stock trading account. Your problem will be – which one to choose from the thousands available?

You could start with the online forums. Type “stock trading forums” into your favorite search engine, and you should find plenty of comment about various online stock brokers. You can email or IM forum contributors and ask them directly for their opinion about two or three brokers if you need a professional viewpoint. Alternatively, simply type the name of the broker you are investigating into your search engine box and see if you can find any reviews or comments on them.

Probably the most important thing to you at this stage is not so much the fees (important though they are) as the ease of use of the online interface on the broker’s web site. Look for clarity and the ability to navigate with the minimum number of clicks. Also check, if you can, the quality of help available if needed, and the speed with which you can access it.

You shouldn’t take long to find a site that you feel comfortable with, and it’s then just a matter of checking that the broker operating it is honest and reliable. Check how long it has been trading, as it’s generally safer to place money with a firm that has been around longer than just a few months or years.

Stock brokers have to be regulated, although the exact terms of regulation vary from one country to another, but, all the same, check on who the regulating authority is. Check on the profile and see if you can find out anything about the board of directors or the chief executive, as the case may be – the people behind the name.

Most online brokers operate “demo” accounts so you can practice your system without risking real money until you feel confident enough. These accounts should be free to run, and should be available for an unlimited time. You should be able to have as many demo accounts as you wish.

You may be offered a training course or video DVD, but be careful about buying anything like that from your broker. Remember that they are out to make money and very often they make it by playing bookmaker and being on the opposite side of the trade to you, so is it really in their interests to have a clientele thoroughly clued up on all the hottest techniques? Avoid any brokers that are too aggressive in their marketing of training to their clients.

When you have signed up with a broker you should be allocated an account manager. He should telephone you within the first few days to ask if he can help you get started and to establish if you are a new trader or a seasoned pro. It makes a lot of difference if you get on well with your account manager, as if you are in a fix or have an urgent enquiry he is the man (or woman) who can help put you right.

Finally, if you are in any way dissatisfied with your broker, don’t be afraid to terminate your account and withdraw your money at the earliest possible opportunity. You may have to wait for any existing trades to finish, but find an alternative broker quickly so that you don’t lose any trading opportunities.

Philip Gegan